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How Green Are Your Nukes?

rbailey@reason.com (Ronald Bailey) — Tue, 10 Nov 2009 13:56:00 EST

The role that nuclear power might play in addressing the problem of man-made global warming is fiercely disputed among environmentalists. Two new books by big names in the movement stake out the boundaries of that debate. On the pro-nuclear side stands Whole Earth Discipline: An Ecopragmatist Manifesto, by Stewart Brand. And parked in the (more or less) anti-nuclear corner is Our Choice: A Plan to Solve the Climate Crisis, by Al Gore. A self-described “green,” Stewart Brand founded and edited the counterculture Whole Earth Catalog back in 1968. In his first book, Earth in the Balance (1992), then-Sen. Al Gore argued, “We must make the rescue of the environment the central organizing principle for civilization.”

Once an opponent of nuclear power, Stewart Brand is now a big backer. With regard to the safety, cost, waste handling, and weapons potential of nuclear power, Brand writes, “I’ve learned to disbelieve much of what I’ve been told by my fellow environmentalists.” On safety, Brand notes, “year after year, the industry has had no significant accidents” in the operation of the world’s 443 civilian nuclear plants. “Radiation from nuclear energy has not killed a single American,” asserts Brand. He does look at the after-effects of the 1986 explosion at the Chernobyl nuclear plant which released a lot of radiation over swathes of northern Europe. He finds that the dire predictions that hundreds of thousands would die of radiation induced cancers turned out to be false. Weighing the safety tradeoffs between nuclear power and man-made global warming, Brand cites this observation from environmentalist Bill McKibben: “Nuclear power is a potential safety threat, if something goes wrong. Coal-fired power is guaranteed destruction, filling the atmosphere with planet-heating carbon when it operates the way it’s supposed to.”

Brand is also fairly sanguine about how to handle the radioactive wastes produced by nuclear power plants. He regards efforts to somehow isolate nuclear wastes for thousands of years as not just absurdly costly, but also wrongheaded, arguing instead that we should figure out how to store it for a couple of hundred years and leave to future generations the choice of what to do with the used fuel. “If we and our technology prosper, humanity by then will be unimaginably capable compared to now, with far more interesting things to worry about than some easily detected and treated stray radioactivity somewhere in the landscape,” writes Brand. “If we crash back to the stone age, odd doses of radioactivity will be the least of our problems. Extrapolate to two thousand years, ten thousand years. The problem doesn’t get worse over time, it vanishes over time.”

But what about the problem of nuclear weapons proliferation? Brand points out that Israel, India, South Africa, and North Korea secretly developed their bombs using research reactors, not power reactors. To reduce the chance of fuel being diverted to produce weapons, he suggests developing an international fuel bank from which nations would basically rent their fuel and to which it would be returned for reprocessing once it was exhausted. President Barack Obama endorsed such a proposal in a speech in Prague in April 2009.

Brand bases his support for nuclear power on four considerations: baseload, footprint, portfolio, and government-scale. Brand enthusiastically hails the fact that in the 21st century most of humanity will dwell in cities and cities need a steady supply of lots of electricity. Baseload power is the minimum amount of consistent power that utilities must supply to their customers. Brand points out that there are currently only three sources for baseload power: fossil fuels, hydro, and nuclear. Brand dismisses solar and wind as baseload power sources because of their intermittency—the sun doesn’t always shine and the wind doesn’t always blow.

Footprint? Nuclear power is compact and renewables occupy a lot of land. Brand quotes nuke booster Gwyneth Craven who notes, "A nuclear power plant producing 1,000 megawatts takes up a third of a square mile. A wind farm would have to cover over 200 square miles to obtain the same result, and a solar array over 50 square miles." Craven, a former opponent of the Shoreham nuclear power plant on Long Island, describes her change of mind in her book, The Power to Save the World: The Truth About Nuclear Energy (2007).

By "portfolio" Brand means that the problem of man-made global warming may be so bad, that humanity must simultaneously pursue all types of projects to cut its greenhouse gas emissions. Ruling nuclear out of that portfolio makes the task of reducing emissions that much harder to achieve. What Brand means by "government-scale" is that he thinks big energy infrastructure requires big government funding and regulatory intervention. Given the array of subsidies currently on offer, the Feds apparently agree.

But what about the costs? Brand breezily waves them aside. “We Greens are not economists,” writes Brand. “We don’t really care about money. Our agenda is to protect the natural environment, not taxpayers or ratepayers."

In the anti-nuke corner we have Al Gore, who pointedly cites "the grossly unacceptable economics of the present generation of reactors." He begins his chapter on the nuclear option: "In the world’s debate over how to produce electricity without generating massive quantities of greenhouse gas pollution, there is a radioactive white elephant in the middle of the room: nuclear power." A white elephant is generally an object that costs more to maintain than it is worth. And it turns out that nuclear energy’s excessive cost is one of two the chief arguments that Gore deploys against it. The second is the risk that nuclear fuel might be diverted to produce nuclear weapons. Gore quite rightly acknowledges that nuclear power is safe and that the issue of how to store nuclear waste could be solved.

Gore notes that in the 1960s, the old Atomic Energy Commission predicted that the United States would have 1,000 nuclear power plants operating by the year 2000. That didn’t happen. Instead only 104 plants are currently operating and they generate about 20 percent of the nation’s electricity. Construction costs for building a nuclear power plant have increased from $400 million in the 1970s to $4 billion by the 1990s and building times doubled. Gore highlights bottlenecks that could choke any nuclear renaissance, including the fact that critical components such as containment facilities to house reactors are currently being produced by only one Japanese company.

Somehow Gore’s cost consciousness gets lost when he considers solar power, however. In his solar power chapter, Gore does a lot of hand-waving about future photovoltaic cell breakthroughs and declining cost curves. Gore also decries lavish subsidies to nuclear power, but approvingly cites "the recent establishment by the U.S. government of new incentives for solar electricity," and state government requirements that utilities obtain a percentage of their power from high-cost renewable sources. As an example of the future of photovoltaic power, Gore points to a new solar plant opened by Florida Power and Light. President Obama dedicated the new 25-megawatt $150 million facility in October. Scaling that plant up to generate the amount of power equal to that a 1,000 megawatt nuclear plant would produce would now cost $18 billion. According the Electric Power Research Institute, constructing a comparable nuclear plant would cost $4 billion.

Gore declares, "Once the world chooses to set ambitious goals for scaling up solar electricity development and commits to the investments necessary to further improve the technologies involved, there is no question that solar energy will provide a major percentage of the world’s electricity." Brand would certainly argue that exactly the same thing can be said of nuclear energy.

Gore’s second big issue with nuclear power is the risk of nuclear weapons proliferation. Reactor-grade fissionable material cannot be used to make bombs; it must be further enriched. If the world went on a nuclear power plant building binge, Gore and others fear that some unsavory governments would covertly divert nuclear fuel to enrichment facilities where it could be turned into nuclear weapons. Gore believes that the international nuclear fuel bank idea is a non-starter. However, Brand notes that since 2006, 18 nations have signed up for something similar, the Global Nuclear Energy Partnership. GNEP has also been endorsed by the head of the International Atomic Energy Agency.

The federal government is now offering a host of new subsidies and guarantees to utilities to build new nuclear power plants. For example, the Energy Policy Act of 2005, supported by the majority of Republicans in Congress and signed by President George W. Bush, authorizes a production tax credit of 2.1 cents per kilowatt hour from the first 6,000 megawatts of new nuclear generation capacity; $2 billion to cover the costs of any regulatory delays; federal loan guarantees for advanced reactors up to 80 percent of the project cost; and a 20 year extension of law that limits the nuclear industry liability to $10 billion dollars. In 2008, the Department of Energy (DOE) invited applications for up $18.5 billion in nuclear construction loan guarantees. The DOE was flooded with applications seeking a total of $122 billion in loan guarantees. If the private sector is unwilling to put money into nuclear projects without an extensive federal safety net, perhaps nuclear is not the way to go?

Recently Center for American Progress blogger Matt Yglesias properly accused generally pro-nuclear power American conservatives of favoring "nuclear socialism." For example, Senate Republicans proposed legislation earlier this year aimed at building 100 nuclear power plants over the next two decades. It’s pretty clear that Brand falls into that camp. On the other hand, Gore can fairly be accused of solar socialism.In this debate among environmentalists, ecopragmatist Brand wins. If man-made climate change is a big problem, then it doesn’t make sense to rule out in advance energy technologies that could contribute to substantially reducing greenhouse gas emissions. Of course, costs matter. The best way to figure out which technologies are cheapest is to set a price on greenhouse gas emissions and let various energy sources compete among themselves. No subsidies needed.

Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is available from Prometheus Books. This column first appeared at Reason.com.

SuperFreaking Out Over Climate Engineering

rbailey@reason.com (Ronald Bailey) — Tue, 03 Nov 2009 14:10:00 EST

“What do Al Gore and Mount Pinatubo have in common?” ask the Freakonomics duo Steven Levitt and Stephen Dubner, in their new book SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance. Their answer: “Al Gore and Pinatubo both suggest a way to cool the planet, albeit with methods whose cost-effectiveness are a universe apart.” Al Gore wants to cool the planet by drastically cutting back the amount of heat-trapping carbon dioxide people are emitting into the atmosphere. In 1991, the Mount Pinatubo volcano in the Philippines cooled the planet when it blasted millions of tons of sulfur particles into the stratosphere where it formed a global haze that lowered average temperatures by about 0.5 degrees Celsius.

In their controversial chapter on global cooling, Levitt and Dubner describe how a bunch of researchers and entrepreneurs at Intellectual Ventures have devised a “garden hose to the sky” method for cooling the planet. The firm, founded by polymath and former Microsoft executive Nathan Myhrvold, proposes the use of an 18-mile hose with helium balloons and pumps every few hundred yards injecting liquefied sulfur dioxide into the stratosphere to mimic the cooling produced by the Pinatubo eruption. The group estimates that setting up five sulfur injection base stations would cost a mere $150 million and cost $100 million per year to operate.

Meanwhile, the costs of deep reductions in carbon dioxide emissions—the strategy currently in vogue—are highly disputed. Global warming alarmists tend to minimize the costs and global warming deniers maximize them (I use the derogatory terms each side calls the other with full malice aforethought). So let’s use as an approximation the latest estimates from British economist Nicholas Stern. Stern, admittedly, inhabits the alarmist camp. He recently asserted that it will take spending 2 percent of global GDP (currently about $64 trillion) to prevent catastrophic climate change. That would amount to spending about $1.2 trillion per year. The money would be spent on developing and deploying a variety of energy efficiency improvements and low carbon energy technologies. That’s the Gore way to cool the planet. Levitt and Dubner conclude by contrasting $250 million versus $1.2 trillion.

Despite their rather breathless presentation of the options for a technical quick fix, these climate engineering schemes are not all that innovative. In fact, similar schemes, including a sulfur sun screen, were outlined in a 1997 article in Reason by physicist and sci-fi writer Greg Benford. In September, the Royal Academy issued a study, Geoengineering the Climate [PDF], evaluating comparable proposals. On November 5, the Science and Technology Committee in the House of Representatives will hold a hearing on the feasibility and risks of climate engineering, including the stratospheric sulfur shield. Clearly, Levitt and Dubner are not making novel proposals, they are popularizing marginalized ideas that have been around for a long time—that's their stock in trade.

Levitt and Dubner acknowledge that the objections to the stratoshield project are “legion,” and indeed they are [PDF]. They note that Myhrvold is not recommending that the stratoshield or other climate engineering schemes be deployed immediately, but that they be “researched and tested so they are ready to use if the worst climate predictions were to come true.” If manmade warming is worse than currently projected, such a shield would also give humanity time to invent and deploy a new no-carbon energy infrastructure.

Yet despite a variety of caveats and cautions, Levitt and Dubner have provoked a firestorm of criticism among ideological environmentalists and their fellow travelers. Why? Because the global warming debate is politicized from top to bottom. Levitt and Dubner breezily stepped into the climate science and policy debate and violated the environmentalist taboo on discussing geoengineering proposals in public.

“The primary reason there has been so little debate about geoengineering amongst climate scientists is concern that such a debate would imply an alternative to reducing the human carbon footprint,” write British climate researchers, Peter Cox, professor of climate system dynamics at the University of Exeter, and Hazel Jeffrey, head of strategic management at the U.K.’s Natural Environment Research Council in Physics World. Or, as Levitt and Dubner acknowledge in their chapter, geoengineering might be seen as “an excuse to pollute,” luring the public into climate change complacency.

In this political fight, accusations of bad faith are the coin of the rhetorical realm. And it doesn’t help that Levitt and Dubner elided over or mischaracterized some research and policy prescriptions. For example, they note that carbon dioxide emissions are being absorbed by seas causing ocean acidification which threatens shellfish and corals, but do not mention that the Pinatubo cooling plans would do nothing to solve that problem. In the policy realm, they cite Harvard economist Martin Weitzman’s argument that the uncertainties surrounding future temperature projections suggest the possibility of catastrophic climate change. However, they fail to note that Weitzman concludes that the remote possibility of total climate disaster justifies spending a lot of money now on efforts to avoid it. And let’s not get into the argument over what recent global temperature trends portend.

In the end, it is not at all surprising that Joe Romm, one of the more apoplectic climate alarmists, who writes the ClimateProgress blog over at the liberal Center for American Progress, dug deep into his rhetorical coffers and accused Levitt and Dubner of bad faith. Stanford University climatologist Ken Caldeira was a participant in the discussions at Intellectual Ventures that Levitt and Dubner report. Caldeira has been seriously researching the implications of geoengineering as a backup plan for cooling the earth for many years. Blogger Romm, in his self-appointed role as enforcer of climate change policy taboos, was horrified that Levitt and Dubner were citing Caldeira in favor geoengineering proposals.

In high dudgeon, Romm apparently emailed Caldeira: “Lines about you like (page 184) 'Yet his research tells him carbon dioxide is not the right villain in this fight' seriously abuse your reputation and your extensive publications and warnings about the threat of ocean acidification.” Romm then solicited Caldeira’s help, explaining, “I want to trash them [Levitt and Dubner] for this insanity and ignorance.” Romm, self-importantly but accurately, added that “my blog is read by everyone in this area, including the media.” He outlined just the sort of thing that he wanted Caldeira to say: “I’d like a quote like ‘The authors of SuperFreakonomics have utterly misrepresented my work,’ plus whatever else you want to say.”

A rattled Caldeira emailed Romm back and complained: “So, yes, my representation in the Superfreakonomics book is damaging to me because it is an inaccurate portrayal of me. The problem is the inaccurate portrayal, not my actions or statements.” Caldeira especially objected that he would never have said carbon dioxide is “not the right villain in this fight.” Romm then published his attempt at debunking Levitt and Dubner. The headline alone reads:

Error-riddled ‘Superfreakonomics’: New book pushes global cooling myths, sheer illogic, and “patent nonsense” – and the primary climatologist it relies on, Ken Caldeira, says “it is an inaccurate portrayal of me” and “misleading” in “many” places.

Romm’s column provoked a flood of condemnations. Levitt and Dubner asked Caldeira what was going on and he responded, “I do think there are a bunch of things in the chapter that give misimpressions.” However, Caldeira also said to other journalists, “I believe the authors to have worked in good faith. They draw different conclusions than I draw from the same facts, but as authors of the book, that is their prerogative.” In any case, a somewhat rueful Caldeira explained, “I was drawn in by Romm and Al Gore’s assistant into critiquing other parts of the chapter. Rather than acting deliberately, I panicked and commented on things that I now wish I would have been silent on. It was obviously a mistake to let myself get drawn into this, and I learned a quick and hard lesson in public relations.” Indeed. Levitt and Dubner say that they will take out the offending “villain” quotation from subsequent editions.

Romm himself mischaracterizes Levitt and Dubner’s chapter as advocating a “geo-engineering-only solution.” Levitt and Dubner make it pretty clear throughout that their Pinatubo cooling proposal is a backup plan, just in case humanity can’t or won’t cut back on its carbon dioxide emissions. For example, Myhrvold notes, “It’s a bit like having fire sprinklers in the building. On the one hand, you should make every effort not to have a fire. But you also need something to fall back on in case the fire occurs.” Myhrvold adds, “It gives you breathing room to move to carbon-free energy sources.”

A year ago, in a roundtable on geoengineering in The Bulletin of the Atomic Scientists, Ken Caldeira argued, “Prudence demands that we consider what we might do if cuts in carbon dioxide emissions prove too little or too late to avoid unacceptable climate damage.” What should we do? “We need a climate engineering research and development plan.” Caldeira warned, “We cannot afford a new period of Lysenkoism and allow political correctness to pollute our scientific judgment. Scientific research and engineering development should be divorced from moral posturing and policy prescription.” He was right then and he’s right now.

Although flawed, in SuperFreakonomics, Levitt and Dubner have done citizens and policymakers a real service by breaking the taboo on discussing the feasibility and risks of climate engineering in public.

Ronald Bailey is Reason magazine's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books. This column first appeared at Reason.com.

Will SuperFreakonmics Effect Our Approach to Climate Change?

adrian.moore@reason.org (Adrian Moore) — Sat, 31 Oct 2009 12:12:00 EDT

Interesting look in the WSJ at SuperFreakonomics' take on dealing with climate change.

Suppose for a minute—which is about 59 seconds too long, but that's for another column—that global warming poses an imminent threat to the survival of our species. Suppose, too, that the best solution involves a helium balloon, several miles of garden hose and a harmless stream of sulfur dioxide being pumped into the upper atmosphere, all at a cost of a single F-22 fighter jet.

Good news, right? Maybe, but not if you're Al Gore or one of his little helpers.

Climate Change and the Nanny State

info@reason.org (David Harsanyi) — Wed, 23 Sep 2009 15:57:00 EDT

If Jesus raised the dead tomorrow, our science czar probably would be too busy calculating the carbon footprint to find salvation.

But who needs Christ when the flock is blessed with sound moral guidance from men and women whose lifework has been cajoling 50 percent plus one to push a button?

From our extravagant health care choices to our risky financial behavior to our ill-conceived love of profit to, most tragically, our immoral penchant for air-conditioning our homes, we need help. I need help.

This week, prepping for the upcoming Copenhagen climate change talks, Dr. Steven Chu, our erstwhile energy secretary, crystallized the administration's underlining thinking by claiming that the "American public ... just like your teenage kids, aren't acting in a way that they should act. The American public has to really understand in their core how important this issue is."

Did you know that Cabinet positions come equipped with a handbook detailing how Americans "should act"? If teenagers—irresponsible bunch of weasels that they usually are—are in need of moral supervision, an environmental train wreck like me needs an intervention.

After all, President Barack Obama warned me this week that a failure to address the problem of "carbon pollution" could create an "irreversible catastrophe." (Yeah, Oxygen, you're next.) Chu recently referred to Earth as "the great ship Titanic."

Chu will deploy bureaucrats to more than 6,000 public schools to, um, teach children about "climate change" and efficiency. They probably won't mention that the Energy Department was found to have wasted millions on inefficient use of energy by an independent auditor this year. (Listen, even our parents aren't perfect.)

Chu the adult likes to say that coal—which as we speak is likely powering your computer, your office, and your house and allows your kids to sit in their schoolhouse without freezing their little toes off in early fall—is his "worst nightmare."

Coal. Not an energy that is running its course or one that the market will replace. This energy source accounts for more than half of electricity production in the entire nation.

Chu, a physicist and Nobel Prize winner—and, unlike me, a deadly serious person—believes that "all the world's roofs should be painted white as part of efforts to slow global warming." Guess what? Not one white roof in my community. What's the holdup? Do we have to pass a law?

We do. Because you are hopeless, petulant, immoral, and clueless. Your nightmare starts with banning a plastic bag at the grocery and ends with a job-killing cap-and-trade scheme. It starts with a public service announcement from a third-tier celebrity and ends with you scouring the earth to find a light bulb that lights something.

For you, the immoral-inclined, there is hope. According to a new Gallup Poll, Americans believe that government is too intrusive. Gallup data show that 57 percent of Americans say the government is trying to do too many things that should be left to individuals. Forty-five percent say there is too much government regulation, and only 27 percent say the amount of regulation is about right.

There is one question we all have to answer: What's more important, negligibly reducing "carbon pollution" through coercive policies or protecting personal freedom and allowing real markets to work? That's the trade-off. Parenting won't change the question.

Remember when George W. Bush's chief of staff, Andrew Card, claimed that the president saw the American people "as we think about a 10-year-old child"? His comment, understandably, caused much mockery and disdain.

The problem, apparently, wasn't the paternalist sentiment; it was the parent offering it. What we needed was a brainy, grown-up administration to harangue and regulate us into submission.

David Harsanyi is a columnist at The Denver Post and the author of Nanny State. Visit his Web site at www.DavidHarsanyi.com. This column first appeared at Reason.com.

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Doubling Down on Climate Change

rbailey@reason.com (Ronald Bailey) — Tue, 22 Sep 2009 15:55:00 EDT

Today, President Barack Obama opened the United Nations climate change summit in New York City with a speech characteristically long on rhetoric and short on specifics. Since the past few months have brought a flood of new facts to the policy debate, let's help Obama by digging into some of the particulars of carbon cutting math.

The aim of this week's meeting is to get 190 nations on the same page for an international deal to replace the Kyoto Protocol. The goal: a new global treaty aimed at getting developed countries to cut their greenhouse gas emissions by 20 percent below the level they emitted in 1990.

Last week, however, climate experts upped the ante, claiming the necessity of much, much deeper cuts. The World Wildlife Federation and the International Institute of Environment and Development issued a joint statement from 40 leading climate scientists declaring that in order to prevent global average temperatures from rising more than two degrees Celsius "developed countries must reduce greenhouse gas emissions by at least 40 per cent below 1990 levels by 2020." In July, the Group of Eight wealthiest nations agreed to limit global warming to two degrees Celsius above pre-industrial temperatures.

Leaving aside the possible impact of such dramatic cuts on the economy: Is it even possible for Americans to cut emissions enough to reach the 40 percent goal in the next decade?

Since carbon dioxide constitutes the bulk of greenhouse gases emitted by the U.S., let's use that as a proxy for figuring out what a cut of 40 percent below 1990 emissions levels would mean. In 2007, the U.S. carbon dioxide emissions totaled around 6 billion metric tons, up from 5 billion tons in 1990, an increase of about 20 percent. So cutting carbon dioxide emitted by 40 percent below the 1990 level would mean that Americans would emit only 3 billion tons by 2020—reducing current emissions by half. The last time the annual U.S. emission of carbon dioxide totaled 3 billion tons was nearly 50 years ago [PDF].

To get a sense of the magnitude of the task, consider that in 1960, the country's population was 190 million, the number of motor vehicles came to 75 million, and real GDP was $2.5 trillion. Americans drove 718 billion miles annually, burning 58 billion gallons of fuel in vehicles that averaged 12 miles per gallon. Today, the 305 million people who live in the U.S. drive 255 million vehicles, and real GDP is $13 trillion. Contemporary Americans drive 3 trillion miles per year, burning 180 billion gallons of fuel in vehicles that average 17 miles per gallon. The good news is that we have become a lot more efficient at producing value per unit of carbon dioxide emitted. In 1960, people produced $800 in GDP for every ton of carbon dioxide emitted. Now, the ratio is about $2,200 of GDP for every ton emitted.

So how might the U.S. cut its carbon dioxide emissions to 1960 levels in 10 years? Let's begin by recognizing that although energy efficiency is not free, I will assume that efficiency improvements will reduce emissions cost-free by 17 percent (the target in the American Clean Energy and Security Act, passed by the House in June) which equals a reduction in carbon dioxide emissions by a little over a billion tons. I will also (generously) assume that Americans will use no more energy in 2020 than they do today; that means that some 2 billion tons of carbon dioxide needs to be cut from current emissions levels in order to get emissions down to 3 billion tons by 2020.

Now let's do some rough number crunching. Burning coal accounts for 36 percent of U.S. carbon emissions, natural gas 20 percent, and oil (gasoline, diesel, jet fuel, and heating oil) 44 percent. Since 90 percent of the coal burned in the U.S. is used to produce electricity, replacing all coal-fired generating plants with zero-carbon electricity generation plants would just about cut emissions by 2 billion tons.

How might this be done? The country could go all nuclear. Currently, 1,400 coal-fired electricity generation plants supply about 45 percent of the country's electricity while 104 nuclear power plants produce roughly 20 percent. So to replace all coal plants with nuclear plants would mean building 250 new 1,000 megawatt nuclear plants over the next 10 years, or about 25 new plants per year. That could be done for about $1 trillion.

But a lot of the people participating in the climate change festivities in New York this week find nuclear power distasteful; they prefer wind or solar power. In that case, all coal fired plants could be replaced with 500,000 windmills at a cost of $1.4 trillion. Similarly, using current conventional silicon solar panels to replace all coal generation would cost $4.5 trillion. (Note: I am using Electric Power Research Institute figures and standardizing wind generation capital costs to a 1,000-megawatt nuclear power plant operating 90 percent of the time, to try to account for the fact that the wind doesn't always blow and the sun doesn't always shine.)

What about natural gas? Since 31 percent of natural gas is consumed to produce 21 percent of U.S. electricity, that means that burning natural gas to generate electricity contributes just about 7 percent to U.S. carbon dioxide emissions, or about 360 million tons annually. Natural gas emits about half the carbon dioxide of coal. The upshot is that replacing all coal-fired plants with 250 1,000 megawatt natural gas plants would reduce emissions by only 1 billion tons, but at a relatively low cost of about $250 billion.

Since two-thirds of all oil in the U.S. is used for transport fuels, this suggests that entirely replacing the current fleet of 255 million vehicles with no-emissions electric or no net-emissions biofuel vehicles would cut 2 billion tons of emissions by 2020. At the current vehicle fleet turnover rate, around 125 million of today's vehicles will be scrapped by 2020. The 2007 Energy Independence and Security Act requires the production of 36 billion gallons of biofuels by 2022 which would be the equivalent of supplying 20 percent of current transport fuel consumption. Earlier this year the Sandia National Laboratory released a highly speculative report that claimed that the U.S. could produce 90 billion gallons of bioethanol by 2030, which would replace 60 billion gallons of gasoline.

Oilman T. Boone Pickens is pushing his plan to use natural gas to power millions of motor vehicles. So let's assume that all 125 million new vehicles will run on compressed natural gas by 2020. Such vehicles emit 25 percent less carbon dioxide and typically cost $6,000 more than conventional vehicles. This kind of vast conversion would reduce carbon dioxide emissions annually by 350 million tons at an additional cost of $750 billion.

So is a 40 percent cut in emissions possible? The foregoing number crunching exercise suggests that it could be. But the commitment is huge: We're talking about the equivalent of shuttering every single one of America's coal plants in favor of hundreds of new nuclear facilities, hundreds of thousands of windmills, or millions of solar panels—or perhaps replacing the entire U.S. auto fleet with zero-emissions vehicles. The magnitude of such an effort would be similar to the projected costs of President Obama's proposed government-funded health insurance plan or the price tag for the War on Terror. These are big changes, not to be glossed over in glowing speeches about international cooperation and our bright green energy future.

Ronald Bailey is Reason magazine's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books. This column first appeared at Reason.com.

Is Government Action Worse than Global Warming?

rbailey@reason.com (Ronald Bailey) — Wed, 09 Sep 2009 16:40:00 EDT

Will government solutions to global warming be worse than global warming itself? Remember that man-made global warming is a negative externality that occurs when burning fossil fuels release carbon dioxide into the atmosphere. Economists define negative externality as a spillover from an economic transaction that harms parties not directly involved in the transaction. In this case, the carbon dioxide released into the atmosphere is thought to be boosting temperatures, raising sea levels, and having other effects on the climate that people must involuntarily pay to adapt to (more air conditioning, switching crops, and so forth). Thus, goes the argument, the price of fossil fuels does not reflect the full cost of consuming them.

Ideally, once the full costs of man-made global warming are calculated, consumers, businesses, governments, and international agencies can adopt policies to take such costs into account. The two policy options generally discussed in this light are cap-and-trade carbon markets and carbon taxes. The idea behind carbon markets is that governments ration how much carbon dioxide and other greenhouse gases may be emitted by setting an overall limit on emissions. Emitters are then required to have a government-issued permit for each ton of carbon dioxide they release into the air. The total amount of permits cannot exceed the cap. Emitters that need to increase their emission allowance must buy permits from those who emit less, creating a market for carbon dioxide emissions permits. The goal of such a rationing scheme is to create a market that sets a price on the negative externalities imposed by burning fossil fuels.

Similarly, imposing a tax on emissions aims to correct the negative climate externalities produced by burning fossil fuels. A carbon tax is a Pigouvian tax (after the economist Arthur Pigou) levied on a market activity to take into account the negative externalities of that activity. In Pigou's formulation, negative externalities occur when the social cost of a market activity exceeds the private cost of the activity, which is another way of saying that the activities of some people are imposing uncompensated harms on other people. The result is that markets over-supply a good—in this case, the energy produced from fossil fuels. The goal is to set a tax equal to the cost of the negative externality, thus nudging markets to produce efficient amounts of a good.

The laudable goal of both carbon markets and carbon taxes is basically the same: make polluters pay for the costs they involuntarily impose on others. So all that remains is to calculate the costs and let policy makers impose either the appropriate markets or taxes. The problem is that in the real world things are never as simple as economic theory would have it. Estimates of the potential damage caused by global warming range widely, depending on estimates of how the climate is likely to react to extra carbon dioxide, future economic growth, and, most crucially, the discount rate.

That term refers to the fact that most people prefer to have a dollar today than a dollar a year from now. This means that current dollars are worth more than future dollars; that people discount the value of future dollars. In other words, a person might be willing to forego a dollar now, but only in exchange for more than a dollar next year. From this insight, economists have developed the concept of discount rates. Let's say someone is willing to forgo a dollar today in exchange for $1.10 next year. The discount rate would be 10 percent. So here's the question that bedevils those trying to calculate the future damages caused by climate change: How much is a dollar in 2100 worth in terms of dollars foregone today? Let's just say that experts have a wide range of opinions on what the proper discount rate should be.

What about the damage we can expect from man-made global warming versus the costs of taking action? According to one calculation performed by Yale economist William Nordhaus, the optimum path toward cooling the climate using a carbon tax would cost $2.2 trillion and reduce climate change damage globally by $5.2 trillion over the next century. His calculation implies a globally harmonized carbon tax that rises in constant dollars from about $35 per ton in 2010, to $90 per ton in 2050, eventually reaching $200 per ton in 2100. In his recent comprehensive review of the literature on economic impacts of future climate change for the Copenhagen Consensus Center, Dutch economist Richard Tol calculated that the optimal policy would be imposing the equivalent of a $0.50 per ton carbon dioxide tax rising at 5 percent per year for the next 90 years. This policy would yield $3 in benefits for every $2 spent. "Available estimates suggest that the welfare loss induced by climate change in the year 2100 is in the same order as losing a few percent of income," notes Tol. "That is, a century worth of climate change is about as bad as losing one or two years of economic growth."

On the other hand, there are a few studies that suggest the benefits of early steep reductions in carbon emissions will far outweigh the costs. A 2006 study by British economist Nicholas Stern found that spending 1 percent of GDP annually to achieve massive early reductions in carbon dioxide emissions is justified. Stern has now upped his estimate to 2 percent per year. Many economists, however, argue that Stern used an unrealistically low discount rate of 0.1 percent to achieve his results. A 0.1 percent discount rate implies that someone would forego $100 today in order to obtain $100.10 a year from now.

Looking at recent reports by the Pew Charitable Trusts and the activist group the Natural Resources Defense Council, U.S. GDP in 2100 is projected to be between 0.6 and 3.6 percent lower than it would otherwise have been. Assuming the $14 trillion U.S. economy grows at 2.5 percent per year, GDP in 2100 would be $130 trillion. If climate change damages push GDP 3.6 percent below what it would otherwise have been that means that GDP in 2100 would be about $125 trillion, or $5 trillion lower. That's not nothing, but the loss is more than double ($12 trillion) what would occur if U.S. economic growth were depressed from 2.5 to 2.4 percent per year between now and 2100.

Clearly, econometric models tell us that implementing smart policies could avoid some damage from climate change. But whether or not the benefits outweigh the costs depends entirely on the policies being optimally adopted. But will governments and international agencies be able to sustain smart policies over the next century? The tribulations of the European Union's cap-and-trade scheme and the current political jockeying over the 1,468-page Waxman-Markey climate change bill in the U.S. Congress are not promising. On the international level, rapidly developing countries like China, India, and Brazil are refusing to accept limits on their greenhouse gas emissions.

Along similar lines, numerous econometric models project that while climate change will have relatively minor effects on developed countries it will significantly harm poor countries. One proposed policy soluton is to have rich countries that emit a disproportionate share compensate poor countries. While this idea might seem appealing to some, one must also consider the sorry 50-year record of wealth transfers in the form of foreign development aid. As development economist William Easterly has argued, most of the $2.3 trillion in aid that rich countries have poured into developing countries over the past half century has been wasted. Is there any reason to think that trillions in climate change aid would be any more effectively managed?

Man-made global warming may simply be a negative externality for which the transaction costs are too high. In other words, any benefits achieved from trying to mitigate global warming will most likely be swamped by the costs of distributing the corporate welfare used to buy the political acquiescence of various industries. As much as one might hope to implement good public policy to deal with the problem, policy nihilism might be the only rational response to global warming.

Was Cash For Clunkers Successful?

anthony.randazzo@reason.org (Anthony Randazzo) — Fri, 04 Sep 2009 14:14:00 EDT

Cash for clunkers was a huge success! We helped the auto dealers! We helped the auto manufacturers! We've done more to save the environment! Hooray for this wonderful program!

... at least, that's what some would like you to think.

Was the Cash for Clunkers (C4C) program successful? That's the question at hand. I guess it might depend on what you mean by success. It's not completely clear if the real reason for the program was a subsidy for the auto industry or climate change activism. It is possible that it was both. The thing is that, by the numbers, I don't think the program helped much in either way.

Let's start with the environment. From The New York Times:

On average, cars are driven 12,000 miles per year, according to government statistics. Considering that the traded-in clunkers had an average fuel economy of 15.8 m.p.g. while the new ones deliver 24.9 m.p.g., a swap saved some 278 gallons of gas per year — which would have released almost 2.8 tons of carbon dioxide when burned.

Assuming the clunkers would have been driven four more years, the $4,200 average rebate removed 11.2 tons of carbon from the atmosphere, at a cost of some $375 per ton. If they would have been driven five years, the carbon savings cost $300 per ton. And if drivers drive their sleek new wheels more than they drove their old clunkers, the cost of removing carbon from the atmosphere will be even higher.

To put this in perspective, an allowance to emit a ton of CO2 costs about $20 on the European Climate Exchange. The Congressional Budget Office estimated that a ton of carbon would be valued at $28 under the cap-and-trade program in the clean energy bill passed by the House in June.

So we did get rid of some emissions, but we're paying a ton of money for it. The crazy part is that C4C paid 15 to 19 times more than the current EU cap and trade regiem—and that program has been critiqued as largely unsuccessful as it is. The same thing for the proposed cap and trade bill in the US, a program that has a lot of holes and little political traction at the moment, of which C4C paid 10 to 13 times more than the projected cost.

You might argue that, well, at least we did something, but that is not a good argument. Sure, climate change is a real thing and there might be stuff we can do about it, but just because it is real doesn't mean cost-benefit analysis should go out the window. Just look at the oil saved. Saving oil is a good thing right? How much do you think this program saved? From FEE:

Taken together the average fuel economy of vehicles traded in was 15.8 miles per gallon, while the average for the clunker replacements was 24.9 miles per gallon. And according to Ford Motor Company, this kind of fuel-economy improvement translates to a reduction of five to ten million barrels of oil consumed over the next five years.

Okay, so an auto company, bound to overestimate as it is, says we saved 5 to 10 million barrels. Not bad you might say. Now how much do you think we use each day? Try 9 million barrels. Yes, the whole, entire Cash for Clunkers program saved one day's worth of oil. At the cost of $3 billion, that means $300 to $600 per barrel of oil, which is currently trading at $68 per barrel. So in a cost benefit, it would have been better just to buy oil with that money and set it aside. But ultimately, though we need ask whether it is the government's role to spend taxpayer money to save oil or reduce CO2 emissions.

Now lets think about the auto dealers:

Sure they sold cars, but how many of those cars were gonna be purchased anyway? The estimated national average for a 2009 Toyota Prius, one of the most popular types of fuel efficient cars purchased, is currently $23,435. Now lets assume you got the maximum trade in, $4,500. You still have to shell out $19,000. So here is my question, how many people weren't planning to get a new car, but once the program started figured, hey, I've got $19,000 just sitting here, I'll get a new car. The answer: very few. What dealers are actually going to discover is that nearly everyone who did buy a car was planning to in the next three to six months. They just bumped up the purchase time to take advantage of the offer.

I've written about this before, but I'll say it again, there is no statistical evidence yet to show that C4C actually caused anyone to decide to purchase a new car that wasn't already planning to. Furthermore, for those few that maybe weren't planning on getting a new car, but did because they actually did have the $19,000 sitting around, the odds are that they "clunker" was in pretty good condition. Good enough anyway for them not to be thinking about getting a new car even though they could afford one. So in that case, we're talking about just destroying value and wealth through taxpayer subsidies. Not good.

To call this program a success is like walking on to a lot where a dozen people are about to sign papers on a new car and saying, "Hey, I'll give you $1,000 if you buy that car." The people, pens in hand, will certainly take the offer and then continue with the paper work. Successful program?

Really, this information isn't that new, its just fascinating to keep berating. This post could be seen as part II of this post from August 24. Also, see my colleague Shikha Dalmia's column in Forbes from a few weeks back or check out Reason's research on climate change here.

Warming Up for a Climate Change Fight

rbailey@reason.com (Ronald Bailey) — Tue, 01 Sep 2009 15:24:00 EDT

The coming fight over climate change and energy policy may make August's health care reform row look like a playground scuffle. In June, the House of Representatives passed the American Clean Energy and Security (ACES) Act by a razor thin margin of 219 to 212 votes. The central feature of the 1,428-page bill is a cap-and-trade program that would limit the emissions of carbon dioxide by American industry and consumers.

The Obama administration and the Democratic leadership in Congress are pressing strongly to get ACES passed and signed into law before the big United Nations Climate Change Conference in Copenhagen in December. The chief goal of that conference is to establish global limits on greenhouse gas emissions for the next decade.

If ACES becomes law, this is what the U.S. will bring to the U.N. negotiating table: Beginning in 2012, the government would set a national cap—or total maximum CO₂ emissions—and then ratchet it downward annually. The U.S. would emit 17 percent less carbon dioxide in 2020 than it did in 2005, eventually falling to 83 percent below 2005 levels by 2050. The plan establishes an artificial market in emissions. Coal and gas electricity generators, oil refiners, and manufacturers who want to produce more than their allotment of carbon dioxide must purchase permits from lower emitters who are willing to sell their spares.

But Obama isn't the only one getting ready for the U.N. climate change conference. The Copenhagen Consensus Center (CCC), a think-tank in Denmark headed by Skeptical Environmentalist Bjorn Lomborg, has commissioned a number of studies from leading climate experts and economists. The studies will provide fodder for a panel of five leading economists (three of them Nobelists) to figure out and rank the best ways to address the problem of man-made global warming.

Methods for dealing with future warming fall into four broad categories: mitigation, adaptation, technology breakthroughs, and geo-engineering. Mitigation means cutting the emissions of gases that are warming the planet. Adaptation means figuring out ways to live well in a warmer world. Technology breakthroughs aim to find ways to produce energy that does not emit warming gases, and is itself a form of mitigation. And geo-engineering aims to cool the planet without reducing the emissions of greenhouse gases, and is a kind of adaptation strategy. (In an earlier column, I analyzed the various CCC geo-engineering proposals and so will not reconsider them again here.)

Let's get a brief overview of the kind of analyses that the expert panel will be ranking this week by looking at the CCC's three main analysis papers dealing with mitigation, adaptation, and green energy breakthroughs.

The chief goal of ACES and the U.N. Climate Change Conference in Copenhagen is mitigation, or reductions in emissions. Both ACES and the U.N. are promoting cap-and-trade schemes as a way to increase energy prices and push industries and consumers to use less fossil fuel energy and encourage inventors to develop new low-carbon energy technologies.

Dutch economist Richard Tol did the chief analysis of the benefits and costs of various mitigation scenarios for the Copenhagen Climate Consensus project. He began by comprehensively reviewing prior studies that tried to calculate the costs of climate change. "Projections of future emissions and future climate change have become less severe over time," Tol reports, "even though the public discourse has become shriller."

Using an econometric model that accounts for projected changes in climate, Tol finds that an optimal policy position: The equivalent to a $0.50 per ton carbon dioxide tax rising at 5 percent per year for next 90 years would yield $3 in benefits for every $2 spent.

Tol also finds that more stringent early efforts to cut greenhouse gas emissions would dramatically increase costs. For example, the equivalent of a $3 per ton carbon dioxide tax rising over time would provide $1 in benefits for every $4 spent. A $68 per ton tax would generate just $1 in benefits for every $100 spent.

A recent Environmental Protection Agency estimate finds that emissions permits would cost around $16 per ton of carbon dioxide by 2020 under the ACES cap-and-trade scheme. If Tol's calculations are right, this means that the costs of ACES and U.N. mitigation schemes under consideration will likely be much higher than the benefits. Frankly, if Tol is right, and given inevitable political chicanery, one has to wonder if it is worth it to try enacting even his optimal policy prescription.

Three Italian economists authored the main research paper on the benefits and costs of various adaptation strategies, such as responding to climate changes by preparing for floods, droughts, crop shifts, and instituting improved building codes. The researchers conclude that adaptation is more cost effective in general than trying to cut emissions in avoiding climate change damages. Adaptation and mitigation are complementary, they write, and should be pursued in tandem. However, analyses find that the lion's share of reaction to dealing with climate change should be borne by adaptation.

The adaptation analysis looks at how climate change affects regions differentially. The study finds that markets can go a long way toward averting damages from man-made global warming. One surprising finding is that rich countries will likely adapt to negative consequences of climate change while exploiting positive changes so successfully that warming will have an overall positive effect resulting in an increase of 0.1 percent of their gross domestic product (GDP) by 2100. On the other hand, climate related losses will amount to 3 percent of GDP in less-developed countries in Africa and Asia.

One plausible calculation suggests that between now and 2100 the world should spend about $10 trillion on adaptation to obtain $16 trillion in benefits from avoided climate damages, with most of the money going to developing countries. This yields a benefit-cost ratio on $1 for every $1.60 of climate damages avoided.

The last broad category of responses to future climate change is proposals to foster the development of low-carbon and no-carbon energy technologies, or energy research and development. The CCC commissioned two McGill University economists, Isabel Galiana and Christopher Green, to look at the benefits and costs that an R&D push might yield. Galiana and Green argue that the ACES bill and the U.N. are engaged in what they call "brute force" mitigation strategies, and that those strategies have already proven to be losing propositions. "Attempts to directly control global carbon emissions will not work, and certainly not in the absence of ready-to-deploy, scalable, and transferable carbon emission-free energy technologies," assert the authors. "The technology requirements cannot be wished, priced, assumed, or targeted away."

Why won't "brute force" mitigation work? Galiana and Green point out that current emission reductions targets imply vastly faster rates of emission reduction than have been the case in past decades. Consider a global emission reduction target of 80 percent by 2100. That would require carbon emissions to fall by 1.8 percent per year. But say economic growth averages 2.2 percent between now and 2100: That implies a 4 percent average annual decline in the amount of carbon-based fuels used to produce goods and services.

To date, Galiana and Green note, the global average rate of decarbonization, the amount of carbon that is emitted per unit of goods and services produced, has been 1.3 percent. To illustrate the economic consequences of trying to boost the rate of decarbonization through brute force mitigation, they generously assume that the decarbonization rate could rise to 3.6 percent annually. But this would still entail a cut in global economic growth from 2.2 percent annually to 1.8 percent. Such a reduction in economic growth would cost an undiscounted $86 trillion in 2100 alone and add up to an undiscounted $2,280 trillion over the next 90 years. And without new low-carbon energy technologies, the authors argue that the assumption of 3.6 percent rate of annual decarbonization is just a fantasy. So likely economic damages will be even larger. "Climate change is a technology problem," Galiana and Green conclude, "and the size of the problem is huge."

Their solution is spending $100 billion per year on energy research and development financed through a $5 per ton tax on carbon dioxide emissions that would be funneled into Clean Energy Trust Funds. The tax would be scheduled to double every ten years as a way to give a forward price signal to encourage the deployment of the new low-carbon energy technologies that they hope will emerge from the labs. They calculate that every dollar spent on new low carbon energy R&D would avoid $11 in climate damages.

"It is much easier to spend on R&D than assure the monies are well spent," Galiana and Green acknowledge. Much current government R&D funding is politically directed and largely wasted. To overcome this problem, they somewhat lamely suggest creating a system of research competition overseen by a panel of independent experts. Oddly, they do not consider deregulating energy markets so as to provide greater incentives for private R&D and investment in new energy production and improvements in efficiency. In any case, Galiana and Green make a very strong case that current energy technologies cannot meet the ambitious emissions reductions goals being advocated by Congress and the United Nations without clobbering the economy.

The CCC expert panel is meeting this week to consider the various proposals for mitigation, adaptation, technology breakthroughs, and geo-engineering. At the end of the week, the panel will rank them by cost-effectiveness. I will report the results of their deliberations once they become available.

Disclosure: Danish taxpayers paid my travel expenses to cover the Copenhagen Consensus Center's second conference last year. There were no conditions placed on my reporting.

Euthanizing Cars Won't Heal the Economy or the Planet

shikha.dalmia@reason.org (Shikha Dalmia) — Wed, 12 Aug 2009 13:02:00 EDT

Our elected leaders were jumping for joy because they had managed to bribe clunker owners to trade in their old smokestacks for cleaner vehicles under the Cash-for-Clunkers programs. But will giving away free money really help the economy or the environment, I ask in my latest Forbes column?

"The program's basic idea involves paying owners of fuel-inefficient clunkers worth less than $4,500 a voucher up to the value of their vehicle toward a new, more fuel-efficient car on the hope that this will stimulate the moribund auto sector and slash carbon dioxide emissions. If you disregard the poor taxpayers financing it, everyone is a winner under this scheme.

"But that's only in the fantasy land on Capitol Hill.

"Edmunds.com, the nation's premier car-buyers' guide, debunked the stimulus claim even before the program was launched. It pointed out that even if the program succeeded in financing 250,000 cars in three months as originally planned, it would boost the economy as much as inducting Paris Hilton would boost the aggregate IQ of MENSA. That's because in any given quarter, about 200,000 such clunkers are traded in anyway. "In effect, we are paying customers to do something most would do anyway," noted Jeremy Anwyl, CEO of Edmunds.com. At best then, the program would drive about 50,000 additional trade-ins, which works out to a whopping $20,000 per clunker...."

"Department of Transportation Secretary Ray LaHood is going around touting the program as a roaring success because the government's list of the top 10 new purchases allegedly shows that drivers are trading in their gas guzzlers for fuel-sipping compacts in order to qualify for the full voucher. LaHood claims that the new vehicles are giving a combined average of 9.6 miles per gallon more than the trade-ins, delivering close to the maximum possible environmental bang for the buck.

"This convinced even critics of the original legislation, such as Sens. Diane Fienstein, D-Calif., and Susan Collins, R-Maine, to vote for its reauthorization. But there are two problems with this claim: One, even if one accepts LaHood's numbers, the fuel savings add up to only 72 million fewer gallons of gasoline every year--about what Americans consume in four and a half hours. This translates into 700,000 tons fewer carbon dioxide emissions annually--about what Americans emit every 57 minutes.

"Two, LaHood's numbers should not be accepted. Why? Because they are based on a false list of top 10 new purchases, an independent Edmunds.com analysis found. Indeed, the list that LaHood has been waving around, with the exception of a Ford Escape, contains mainly gas-sippers such as Toyota Corolla and Honda Civic with the holy Prius hybrid occupying the fourth place. But the list compiled by Edmunds.com contains two full-size, gas-guzzling SUVs and a crossover--with the Prius nowhere in sight. In other words, the program is effectively paying drivers to trade in their clunkers for--hang on to your recycled hats!--other clunkers. This undercuts LaHood's fuel economy claims by about 37%.

But there's more....."

Whole thing here.

Cash for Clunkers Destroys Wealth and Resources

shikha.dalmia@reason.org (Shikha Dalmia) — Wed, 12 Aug 2009 00:00:00 EDT

Forbes

It seems almost petty to join in the loud kvetching that has erupted in the blogosphere--at least in its more economically literate portions--since Congress reauthorized the so-called Cash for Clunkers program last week. After all, the program's $3 billion total cost barely constitutes chump change in that august body's stimulus/bailout spending spree, which, by some reckoning, is touching $13 trillion.

But the program's lunacy-to-spending quotient, especially when it comes to its alleged environmental benefits, is so high that it is hard to stay quiet.

So here goes.

The program's basic idea involves paying owners of fuel-inefficient clunkers worth less than $4,500 a voucher up to the value of their vehicle toward a new, more fuel-efficient car on the hope that this will stimulate the moribund auto sector and slash carbon dioxide emissions. If you disregard the poor taxpayers financing it, everyone is a winner under this scheme.

But that's only in the fantasy land on Capitol Hill.

Edmunds.com, the nation's premier car-buyers' guide, debunked the stimulus claim even before the program was launched. It pointed out that even if the program succeeded in financing 250,000 cars in three months as originally planned, it would boost the economy as much as inducting Paris Hilton would boost the aggregate IQ of MENSA. That's because in any given quarter, about 200,000 such clunkers are traded in anyway. "In effect, we are paying customers to do something most would do anyway," noted Jeremy Anwyl, CEO of Edmunds.com. At best then, the program would drive about 50,000 additional trade-ins, which works out to a whopping $20,000 per clunker.

Of course, the $2 billion more that Congress just authorized will bump net new sales by another 100,000. But this too is peanuts given that the industry needs 5 million additional sales to come out of the doldrums. Even though car companies are lavishing praise on the bonanza they are reaping, they are not exactly rushing to increase production.

Nor is the program delivering on its eco-goals. It aims to nudge participants toward more fuel-efficient cars by handing the full $4,500 voucher only to those whose new cars get at least 10 miles per gallon more than their trade-ins--with a smaller rebate of $3,500 going to drivers who get between four and nine mpg more.

But buyers ain't buying it.

Department of Transportation Secretary Ray LaHood is going around touting the program as a roaring success because the government's list of the top 10 new purchases allegedly shows that drivers are trading in their gas guzzlers for fuel-sipping compacts in order to qualify for the full voucher. LaHood claims that the new vehicles are giving a combined average of 9.6 miles per gallon more than the trade-ins, delivering close to the maximum possible environmental bang for the buck.

This convinced even critics of the original legislation, such as Sens. Diane Fienstein, D-Calif., and Susan Collins, R-Maine, to vote for its reauthorization. But there are two problems with this claim: One, even if one accepts LaHood's numbers, the fuel savings add up to only 72 million fewer gallons of gasoline every year--about what Americans consume in four and a half hours. This translates into 700,000 tons fewer carbon dioxide emissions annually--about what Americans emit every 57 minutes.

Two, LaHood's numbers should not be accepted. Why? Because they are based on a false list of top 10 new purchases, an independent Edmunds.com analysis found. Indeed, the list that LaHood has been waving around, with the exception of a Ford Escape, contains mainly gas-sippers such as Toyota Corolla and Honda Civic with the holy Prius hybrid occupying the fourth place. But the list compiled by Edmunds.com contains two full-size, gas-guzzling SUVs and a crossover--with the Prius nowhere in sight. In other words, the program is effectively paying drivers to trade in their clunkers for--hang on to your recycled hats!--other clunkers. This undercuts LaHood's fuel economy claims by about 37%.

But there's more.

One of the crazier aspects of the Cash for Clunkers program is that it requires the engines of the traded-in clunkers to be euthanized by a sodium silicate injection. The point is to ensure that these clunkers never see the light of day again. This will no doubt force some folks who would have otherwise used the engine to refurbish their old cars to buy newer, less polluting ones. But this won't reduce emissions, it'll actually enhance them.

For starters, manufacturing a new car has the same cost in terms of emissions as driving it for a year. Thus, the more the program causes new cars to roll off the assembly line, the more it will contribute to pollution, at least initially. What's more, when drivers switch to more fuel-efficient cars, they don't pocket the fuel savings, they actually drive more, producing no net reduction in emissions.

Above all, however, the program might severely disrupt the ability of the used-car market to recycle parts, producing all kinds of negative unintended consequences for the environment. (Where is the green obsession with recycling when you need it?) The engine, combined with the drive train, accounts for about 35% of the value of the used car. But with this destroyed, it will make far less sense for recyclers to incur the cost of cleaning up mercury and other toxins to mine the remaining parts from the discarded vehicle. The upshot is that the car is more likely to land in scrappage with many valuable parts--engine, pistons, brakes--still intact. This will take a huge chunk out of the 80 million barrels of oil that the recycling industry saves the country every year, maintains Michael Wilson, executive vice president of the Automotive Recyclers Association.

So, to recap, the Cash for Clunkers plan involves restoring the economy by destroying wealth and healing the environment by destroying resources. By this logic, we should use the stimulus money to fund a new Godzilla brigade to mow down the country and rebuild it in a more environmentally friendly way. Imagine how much richer and cleaner the planet would be.

Shikha Dalmia is a senior analyst at Reason Foundation and a bi-weekly Forbes columnist, where this column first appeared.

Cash for Climate

rbailey@reason.com (Ronald Bailey) — Tue, 11 Aug 2009 14:21:00 EDT

Let's say the world will spend $250 billion a year for the next 10 years to minimize the suffering caused by climate change. What's the best bargain we can get for the money?

The Copenhagen Consensus Center (CCC), a think-tank in Denmark headed by Skeptical Environmentalist Bjorn Lomborg, has commissioned 21 papers from leading climate experts and economists to answer that very question. Over the coming month, the CCC will be looking at the benefits and costs of proposed actions in four different areas: climate engineering, cutting future greenhouse gas emissions, economic growth, and green energy technologies. Each topic will feature a main research paper accompanied by a series of critiques by other experts called perspective papers.

At the end of the process, the CCC will assemble a panel of five leading economists, three of them Nobelists, to rank all of the proposed solutions as to their relative cost-effectiveness. This ranking process is the CCC's specialty—it has twice used this technique to rank order various proposals for solving some of the world's biggest problems, including disease eradication, sanitation, economic development, malnutrition, and the oppression of women.

This week, the CCC kicked off the process with the high-tech topic of climate engineering, starting with a paper by J. Eric Bickel, an assistant professor at the University of Texas at Austin in Operations Research and a fellow in the Center for International Energy and Environmental Policy, and Lee Lane, a resident fellow at the American Enterprise Institute in Washington, D.C., where he also serves as the co-director of the Institute's Geoengineering Project. Bickel and Lane accept that global warming poses some risks to humanity and use cost-benefit analysis to weigh various proposals for engineering global climate. The chief question that they address is how much research and development funding should be devoted to investigating the feasibility of climate engineering.

The two geoengineering options to manage climate change that Bickel and Lane consider are blocking sunlight or capturing carbon. They favor blocking sunlight—or solar radiation management—over taking carbon out of the atmosphere—or air capture. Bickel and Lane estimate the costs of various solar radiation management scenarios that would offset 0.6° C, 1.3° C, and 1.9° C of future warming, and find that the benefits of deploying some proposed solar radiation management techniques outweigh the costs by between $4 and $18 trillion. (Assuming the calculations of Dynamic Integrated Model of Climate and Economics developed by Yale University economist William Nordhaus, which suggests that the 200-year present value of climate damages would be about $22 trillion, are in the right ballpark.) Air capture involves technologies that would remove ambient carbon dioxide from the atmosphere and most likely bury it underground. Bickel and Lane argue that air capture technologies are too expensive and so do not spend a great deal of time on the topic.

The planet is warming because greenhouse gases like carbon dioxide re-radiate heat from the sun back toward the earth as it tries to escape into space. Solar radiation management techniques aim to increase the amount of sunlight radiated back into space in order to lower the globe's temperature. Bickel and Lane look at proposals that would purposely inject sulfur or other reflective particles into the stratosphere on an ongoing basis to counter the effects of man-made global warming.

This phenomenon sometimes occurs naturally. Volcanoes occasionally inject sulfur particles high into the stratosphere 8 to 12 miles above the earth's surface where they reflect sunlight back into space cooling the planet. For example, when Mount Pinatubo erupted in 1991 in the Philippines, it injected huge amounts of sulfur particles into the stratosphere lowering the globe's average temperature by about 0.5° C for the next year.

The priciest option that Bickel and Lane analyze is a proposal to install a sunshade involving about 4 trillion autonomous "flyers" placed at about 1 million miles in space to dim the sunlight before it reaches the earth. To offset temperatures by 0.6° C, it would take 4 trillion flyers, each about 400-inches square, and weighing a total of 5 million tons. Assuming each launch could carry 800,000 flyers up at a time, that would mean 5 million launches. If a launch occurred every 5 minutes, the entire sunshade could be in place in about 50 years. Using current numbers for launch and satellite manufacturing costs, the sunshade would cost $135 trillion to make and $395 trillion to get it into space. These costs greatly exceed mainstream estimates of the damages that might be caused by climate change. In fact, those figures add up to about 10 times the size of the current world GDP.

Stratospheric aerosols are next up for consideration. Bickel and Lane report that one recent study suggested it would be possible to use a fleet of 167 F-15 airplanes flying three times per day to inject about 1 billion million tons of sulfur particles into the stratosphere each year. This would cost about $4.2 billion per year. The same study calculated firing 8,000 artillery shells daily loaded with sulfur into the stratosphere would cost about $30 billion annually or launching 37,000 stratospheric balloons daily would cost between $21 billion and 30 billion per year. Bickel and Lane calculate that the benefit-cost ratio for using artillery shells to loft aerosols into the stratosphere is 27 to 1. The F-15 option's benefit-cost ratio would be even more favorable.

The third solar radiation management technique Bickel and Lane consider is marine cloud whitening, a proposal that involves hundreds of ships cruising the world's oceans spewing salt water as a mist into the atmosphere. The salt particles would function as cloud condensation nuclei which would increase the extent and brightness of low level clouds over the oceans. These clouds would reflect sunlight back into space cooling the earth's surface.

In this case, to offset 0.6° C of warming would involve 284 ships spewing salt water into the air at a cost of $1 billion per year. To reduce future temperatures by 1.9° C, 1881 vessels would have to be deployed at a cost of $5.8 billion annually. Bickel and Lane calculate that the benefit-cost ratios for cloud whitening range from 7,000-to-1 to 2,500-to-1.

On the strength of these high benefit-cost ratios, Bickel and Lane argue that the Copenhagen Consensus panel of economists should allocate an average of 0.3 percent of its $250 billion climate change budget ($750 million per year) to solar radiation management and air capture research over the next decade.

To help the final panel in their evaluations, the CCC commissioned two critiques of the Bickel and Lane paper. In her perspective paper critiquing Bickel and Lane's assessment of climate engineering, Anne E. Smith, an economist who heads up the climate and sustainability practice at the consultancy Charles River Associates, delves deeper into the uncertainties about the benefits and costs of solar radiation management. One important goal of R&D into solar radiation management is to reduce uncertainties about its risks.

A remarkably interesting observation by Smith is that such research will have no value to people who are inclined to have positive views about climate engineering. This is because partisans of the technique will tend to dismiss research that suggest that it poses higher risks as false alarms. On the other hand, research might also have no information value because it will never be good enough to convince hyper-cautious people that geoengineering is safe. Finally, Smith opines that Bickel and Lane have given air capture too short shrift and that it could serve as a backup option should new costly risks emerge after solar radiation management has been deployed.

The second perspective paper, from University of Colorado environmental studies professor Roger Pielke, Jr. takes a harder look at the costs and benefits of air capture of carbon dioxide from the atmosphere. Among other reasons, Pielke favors air capture over solar radiation management because it meets the three rules for technological fixes, which are quite useful and worth examining in more detail here.

The first rule is that the technology must largely embody the cause-effect relationship connecting problem to solution. In this case, solar radiation management fails because it addresses the effect of higher average global temperatures rather than the cause, which is accumulating concentrations of greenhouse gases in the atmosphere. On the other hand, air capture aims to remove the cause—e.g., greenhouse gases—from the atmosphere thus preventing an increase in temperature.

The second rule is that the effects of the technological fix must be assessable using relatively unambiguous or uncontroversial criteria. Air capture clearly meets this criterion. Pielke notes, "If the accumulation of carbon dioxide in the atmosphere is judged to be a problem, then its removal logically follows as a solution."

The third rule of technological fixes is that research and development is most likely to contribute decisively to solving a social problem when it focuses on improving a standardized technical core that already exists. In this case, Pielke argues that air capture technologies have been developed now that can be refined and deployed with no risk to the climate system.

To assess the costs of air capture Pielke points out that various estimates for reducing the emissions of carbon dioxide might cost between 1 to 3 percent of total global GDP over the next century. Assuming about 3 percent global GDP growth to 2100, Pielke calculates that the cost of air capture at even $500 per ton of carbon would cost 2.7 percent of global GDP if the goal is to make sure that carbon dioxide concentrations do not exceed 450 parts per million. Pielke concludes, "My bottom line is that the geoengineering of the earth system as a way to adapt to increasing concentrations of greenhouse gases is a losing proposition."

Despite the cautions of Smith and Pielke, it is hard to disagree with Bickel and Lane's conclusion on climate engineering: "The results of this initial benefit-cost analysis place the burden of proof squarely on the shoulders of those who would prevent such research."

Note: I will be reporting on the Copenhagen Consensus Center's next series of papers dealing with climate mitigation, adaptation, and green energy research as they are publicly released.

Disclosure: The Copenhagen Consensus Center paid my travel expenses to report on its Consensus 2008 process. The Center exercised no editorial control whatsoever over my reporting.

How Green Is Your Crystal Ball?

rbailey@reason.com (Ronald Bailey) — Tue, 04 Aug 2009 15:17:00 EDT

The National Academy of Sciences (NAS) recently dusted off its 30-year-old crystal ball and gazed into the future of American energy use. Its findings were released last week in report titled America's Energy Future: Technology and Transformation. The experts on the panel are slightly stoic and guardedly optimistic. In 10 to 25 years—"with a sustained national commitment"—they say, the U.S. will be able to achieve "energy-efficiency improvements, new sources of energy, and reductions in greenhouse gas emissions through the accelerated deployment of existing and emerging energy-supply and end-use technologies."

This particular mode of divination harks back to a similar effort back in 1980, when the NAS issued a similarly ballyhooed report, Energy in Transition, 1985 to 2010. That report took four years to assemble and involved 350 of America's smartest energy researchers, engineers, and economists. Before we take the new findings too seriously, let's see how 1980's experts have fared three decades on.

The 1980 report heavily emphasized conservation, and noted that coal and nuclear fission were the "only readily available large-scale domestic energy sources that could even in principle reverse the decline in domestic energy production over the next three decades." The report was extremely pessimistic about petroleum, stating that "world supplies of petroleum will be severely strained beginning in the 1980s." Government-funded research on synthetic coal-based fuels was trumpeted as a great source of hope.

The 1980 report offered six scenarios for calculating the hypothetical total primary energy use for a country with a population of 280 million in 2010. The scenarios ranged from "very aggressive" federal policies aimed at reducing energy demand paired with quadrupled energy prices and 2 percent annual growth; to moderate with doubled energy prices and 2 or 3 percent economic growth; to essentially unchanged 1975 policies, stable or decreasing energy prices, and 2 percent growth.

So how well did the NAS foresee America's energy future back in 1980? Well, for starters, energy prices did not quadruple or even double over the past 30 years.

According to the Energy Information Administration (EIA), the real price of electricity in 1975 was 9.2 cents per kilowatt hour (in 2000 dollars) and it was 9.28 cents per kilowatt hour in 2008.
In real dollars a barrel of oil cost $48 in 1975. In 2009, the price has so far averaged $43 per barrel.
In real dollars, a gallon of regular gasoline averaged $2.21 in 1975 and in August 2009, the EIA reported that regular gas was going for an average of $2.51 per gallon.

And the good news is that the U.S. economy grew at slightly more than 3 percent per year on average since 1985—not the pessimistic 2 percent rate envisioned in five of the six scenarios considered in 1980.

The NAS scenario in which energy prices remained essentially unchanged while the economy grew at a 2 percent rate projected that the U.S. would be using 130 quads of primary energy by 2010. (A quad is a quadrillion British Thermal Units (BTUs) which is equal to the amount of energy in 45 million tons of coal, or 1 trillion cubic feet of natural gas, or 170 million barrels of crude oil.) The 1980 NAS scenario in which the economy grew at 3 percent per year while energy prices were double their 1975 rates projected slightly less than 130 quads of energy consumption by 2010.

As we now know 30 years later, energy prices remained essentially flat and the economy grew at 3 percent. The 1980 report noted that "more rapid economic growth...implies higher energy consumption." Had the assumptions behind the 1980 NAS scenarios been accurate, Americans should be using far more than 130 quads of primary energy by now.

What actually happened? According to the EIA, the U.S. uses just 98 quads of energy today up from around 80 quads in 1980.

Were various energy conservation measures adopted by federal and state governments over the past three decades responsible for substantially lowering the amount of energy Americans use? Nope. In 2004, Resources for the Future, a think-tank based in Washington, D.C., performed "a comprehensive review of energy efficiency programs in the United States, with a focus on the adoption of energy-efficient equipment and building practices." They found that energy efficiency programs reduced annual primary energy consumption by 4 quads below what it would otherwise have been. So most energy efficiency improvements in the U.S. over the past 30 years were adopted without government mandates.

The 1980 report also confidently predicted that "technical efficiency measures alone could reduce the ratio of energy consumption to gross national product...to as little as half its present value over the next 30-40 years." According to the new NAS report, energy use per dollar of GDP has already fallen by 44 percent since 1980, dramatically exceeding expectations without dramatic government intervention.

And what about the mix of energy we would be using? The middle of the road scenario in the 1980 report was called "enhanced supply." In that scenario policies are enacted to facilitate the fast permitting of energy facilities like synfuels and solar power plants, mines, and offshore oil wells. Not all sources would be maxed out over the next 30 years, but the scenario gives us some insight into what leading energy experts were thinking back then. According to the study, Americans might be using as much as 16 quads of crude oil, 14 quads of natural gas, 8 quads of synthetic liquid fuels from coal, 5 quads of synthetic gas from coal, a total of 50 quads of energy from coal, 41 quads from nuclear, 5 quads from hydropower, and nearly 11 quads from solar energy.

The 1980 guesses were way off the mark. Next year, Americans will use 27 quads of crude oil, 22 quads of natural gas, 22 quads of coal, 8 quads of nuclear, 2.5 quads of hydropower, 10 quads of other liquid fuels such as natural gas condensates and ethanol, 3 quads of biomass, and 1.5 quads of renewable fuels like wind and solar.

The prospects of various nuclear technologies—including fast breeder and thorium reactors—filled many pages in the 1980 report. However, no nuclear reactors have been ordered in the United States since 1978, and no exotic new kinds of reactors have been built at all. Achieving President Jimmy Carter's announced goal of 20 percent solar energy by 2000 would cost a predicted $3 trillion (or $7.7 trillion in 2008 dollars). For comparison, keep in mind that the total capitalization of all shareholder-owned electric utilities in 2008 was $652 billion. America's Energy Future reports that solar power supplies just 0.08 percent of U.S. energy needs today.

So what about the new America's Energy Future report from the National Academy? Just like in the 1980 report, energy efficiency is seen as the "nearest-term and lowest-cost option for moderating our nation's demand for energy." The experts who wrote the new report believe that the accelerated deployment of energy efficiency technologies could reduce energy use by 15 percent in 2020 and by 30 percent in 2030. Interestingly, this is roughly the same rate of efficiency improvement that was achieved over the past 30 years, largely without the help of government mandates and subsidies.

In the 1980 report, coal was king—and fossil fuel still reigns in the Energy Future report. Instead of predicting exciting new nuclear tech, the new report foresees a role for "evolutionary nuclear technologies," upgraded reactors very similar to the ones operating today.

Although climate change was mentioned in passing in the 1980 report, concerns over man-made global warming loom much larger for many energy experts today. Instead of getting excited about new kinds of nuclear power, the new report focuses on today's trendy technology of carbon capture and sequestration (CCS). The idea is to safely bury huge quantities of carbon dioxide underground rather than releasing it into the atmosphere. How huge? A single standard 1,000 megawatt coal-fired electricity generating plant would have to bury 300 million cubic feet of carbon dioxide per day. According to the NAS study, this is equivalent in volume flow to about 160,000 barrels of oil per day, comparable to the daily output of a large oil field.

The new NAS report suggests that the entire existing coal power fleet of generating plants could by replaced by CCS coal power by 2035. Considering that there is currently 336,000 megawatts of coal generating capacity, this implies that CCS technology by 2035 would be injecting carbon dioxide underground at a rate equivalent to 53 million barrels of oil per day. To understand the scale: that's double the volume of oil that Americans consume daily right now. The new report calculates that installing CCS technology would about double the cost of building an electric power plant and would use 20 to 40 percent of the plant's energy to capture, compress, and transmit the carbon dioxide produced.

The costs for CCS in the report are entirely speculative. The technical and commercial feasibility of sequestering vast quantities of carbon dioxide is completely unknown. So the NAS panel strongly recommends that the federal government embark immediately on a program to build at least 10 commercial scale coal-fired CCS plants by 2020 to find out if the technology can work.

Currently, the U.S. consumes about 4,000 terawatt-hours (TWh) of electricity. The energy content of 1 quad is equal to about 293 terawatt-hours. However, a typical electric power plant burning fossil fuels is only able to capture about a third of the energy from the fuel, so 1 quad of fuel actually produces about 97 terawatt-hours electricity. In best case aggressive deployment scenarios, the new NAS report finds that renewables could supply 1100 TWh per year by 2035; the entire existing coal power fleet could by replaced by CCS coal power by 2035 and provide provide 3,000 TWh of electricity per year; nuclear plants could supply 850 TWh of electricity by 2035.

Looking over the portfolio of new low-carbon energy technologies, including coal and natural gas with CCS, nuclear, and renewables, the report notes with considerable understatement, "Although the potential picture with these new supplies is promising, they will likely result in higher electricity prices."

Despite all the political agitation calling for "independence from foreign oil," the new report observes that "petroleum will continue to be an indispensable fuel" through 2035. The NAS experts accurately describe corn-based ethanol as a dead-end fuel source that they anticipate will be replaced with cellulosic ethanol. Cellulosic ethanol would be produced using dedicated energy crops like switch grass grown on land currently in the Conservation Reserve Program.

The technology for producing cellulosic ethanol is unproven and even the new NAS report suggests that the fuel will be uneconomical unless the price of oil rises to over $115 per barrel. However, the NAS report suggests that a process that combines biomass with coal could produce 1.7 to 2.5 million barrels of synthetic liquid transport fuels by 2035. One environmental caveat: Producing synfuels using coal would likely boost coal production by 50 percent over the otherwise projected rate. The synfuels would be economical if the price of oil exceeds $70 per barrel.

The National Academy of Science reports are supposed to guide the thinking of policymakers about what is needed to advance future energy production. One constant in both reports is the unwavering faith of energy experts in the efficacy of government-subsidized energy research and development, and government intervention in energy production markets. Looking back we can see that the Energy in Transition report from 1980 was largely a failure as an exercise in technical and economic prognostication. More happily, we can also see that it had little apparent effect on public policy.

If policymakers believe that greenhouse gas emissions are dangerous and if they believe as a consequence that low-carbon energy technologies must be developed and energy conservation encouraged, there is a simple policy that will address all of those issues at a stroke: put a price on carbon dioxide. As environmentalists Miriam Horn and Fred Krupp wrote in their 2008 book Earth: The Sequel: "Mandates presume that the government already knows the best way to proceed on energy. But the government doesn't know any better than anyone else."

California's Economic Climate Change Denialism

rbailey@reason.com (Ronald Bailey) — Tue, 21 Jul 2009 15:08:00 EDT

In 2006, Gov. Arnold Schwarzenegger and the California state legislature decided that each and every man, woman, and child in California should eliminate 4 tons of CO2 emissions by 2020. And so America's first mandatory cap on greenhouse gasses, the Global Warming Solutions Act, became law. The state must now reduce its emissions to below 1990 levels, a 30 percent reduction from projected business-as-usual emissions, essentially cutting the allotment of carbon dioxide equivalent from 14 tons to 10 tons per person.

Opponents of the bill worried that deep, rapid cuts in emissions would hurt the state's economy. But never fear: In 2008, the California Air Resources Board issued a study reassuring Californians that they can make money hand over fist selling each other wind turbines and electric cars. Implementation of the cap "creates more jobs and saves individual households more money than if California stood by and pursued an unacceptable course of doing nothing at all to address our unbridled reliance on fossil fuels," the study cheerfully declared. Because by 2020 the mandates will increase economic production by $27 billion, boost personal incomes by $14 billion, raise per capita incomes by $200, and produce an additional 100,000 jobs. According to the study, "the bulk of the economic benefits are the result of investments in energy efficiency that more than pay for themselves over time."

The study projects that Californians will offset higher electricity and gasoline bills by driving more fuel efficient cars, by adjusting their thermostats to 68 degrees in winter and 78 degrees in summer, and by using energy efficient appliances at home. The idea is that while electricity will cost more, Californians will do things like switching from incandescent bulbs to energy thrifty compact fluorescent bulbs to reduce their energy usage.

But are these projections accurate? The study's economic peer reviewers don't think so. For example, UCLA economist Matthew Kahn warned that the cap "is presented as a riskless 'free lunch' for Californians." He noted that California's electricity prices are projected to increase by 14 percent, yet manufacturing employment is also supposed to increase by 0.4 percent. "This is a surprising finding," writes Kahn. "The micro-econometrics literature has concluded that increased energy prices retards manufacturing employment growth." He cites studies showing that cities with high electricity prices lose manufacturing jobs. Another peer reviewer, Harvard University economist Robert Stavins, bluntly states that the study's analysis is "systematically biased (and remarkably, internally inconsistent) in ways which lead to potentially severe underestimates of costs."

No one denies that energy prices will go up. Successful implementation of the Global Warming Solutions Act requires that 33 percent of the state's energy come from renewable sources by the 2020 deadline. Recent research finds that when states establish renewable portfolio standards for electricity, they pay on average 2 cents more per kilowatt-hour more than states that do not have such standards. That might not sound like much, but it's an 8 percent increase. California already ranks seventh in the nation based on how much California businesses, on average, spend for electricity. Only businesses in three very hot southern states and three very cold northern states spend more.

California gasoline taxes amount to 63.9 cents per gallon, the highest in the nation. Gasoline costs more in the Golden State than anywhere else in the lower 48 states. It is true that California is the fourth lowest state in per capita energy consumption. While some of the lower energy usage can be attributed to higher residential energy efficiency standards, substantially higher than average residential and commercial electricity rates also depress demand. The new mandates would add to the heavy regulatory burdens under which California businesses already groan. The Small Business Survival Index ranks California 49th among all states for business friendliness, just beating out New Jersey as the least business friendly state in the Small Business and Entrepreneurship Council's annual rankings.

Yet the California Air Resources Board predicts that increasing energy prices and implementing new regulations in California will improve the state's economic outlook. A 2007 study by the Electric Power Research Institute begs to differ; the non-profit electricity industry think tank found that "the cost of meeting the stated 2020 emission reduction goal could range from $104 billion to $367 billion of reduced consumption (discounted present value through 2050)."

Last week, the California Small Business Roundtable issued their own report, charging proponents of the 2006 global warming mandate with wild optimism about its alleged beneficial economic effects. The report notes that California's 700,000 small businesses comprise 99 percent of all employer firms, provide 52 percent of all jobs, and contribute 75 percent of gross state product. Using the California Air Resources Board's own figures, the new report finds that the annual implementation costs would likely result in a loss of $182 billion in gross state output and 1.1 million fewer jobs. The business losses would occur in part because regulations would increase costs to consumers whose discretionary incomes would be reduced by about $3,800 per year as they paid more for housing, transportation, natural gas, electricity, and food.

The California Air Resources Board issued a fanciful study finding that mandates to cut greenhouse gas emissions will cost Californians essentially nothing. This is pure California dreaming. In his stinging critique of the study, Harvard economist Stavins said that putting the world on a less carbon-intensive path will require serious policy and sacrifice. "This will not be easy, and it will not be cheap," he wrote. "Indeed it will be costly." Telling the public anything else is just climate change economic denialism.

U.S. Dances Around Carbon Limits with India

sam.staley@reason.org (Samuel Staley) — Mon, 20 Jul 2009 17:45:00 EDT

India recently blasted U.S. attempts to force carbon emissions limits on India, and watching Secretary of State Hilary Clinton tap dance around the criticism was both informative and disturbing. It really showed the shallowness of the U.S. approach to climate change.

"No sooner had Mrs. Clinton marveled at the [Indian] building’s environmentally friendly features [during her state visit to Gurgaon, India] — like windows that flood rooms with light but keep out heat — than her hosts vented frustration at American pressure on India to cut its emissions.

"In a meeting with Mrs. Clinton, India’s environment and forests minister, Jairam Ramesh, said there was “no case” for the West to push India to reduce carbon dioxide emissions when it already had among the lowest levels of emissions on a per capita basis. “If this pressure is not enough,” he said, “we also face the threat of carbon tariffs on our exports to countries such as yours.”

"Rather than projecting solidarity, the visit ended up laying bare the deep divide between developed and developing countries on climate policy — a gulf the Obama administration will have to bridge as it tries to forge a new global agreement on climate change later this year."

It's true. No one in the U.S. (or Europe or Asia) would ever tolerate the dire poverty experienced by hundreds of millions of people in India, China, and elswhere, yet our policies focused so much on reducing overall carbon emissions essentially means those people will be trapped in poverty in perpetuity. Yet, global carbon emissions can't possibly be lowered without keeping India, China, etc. in poverty (and keep per capita carbon emissions down).

The logic is inescapable to everyone except Sec. Clinton and the Obama Administration:

"Mrs. Clinton, in the first visit to India by a top Obama administration official, offered reassurances that the United States had no intention of forcing India into an economically crippling deal.

“No one wants to, in any way, stall or undermine economic growth that is necessary to lift millions more people out of poverty,” Mrs. Clinton said at a news conference. “The United States does not, and will not, do anything that would limit India’s economic progress.”

"American officials said they did not expect these differences to be aired during what was supposed to be an upbeat event, focusing on technology. But they said they did not feel betrayed."

Hmm. They must know that a few solar panels and windmills in India isn't going to come close to cutting carbon emissions to 1990 levels as they advocate in the U.S.

Sometimes, the logic of U.S. climate change policy verges on the absurd. This is not science-based policy or politics.

Carbon Dioxide May be Less Important to Global Warming

sam.staley@reason.org (Samuel Staley) — Fri, 17 Jul 2009 08:27:00 EDT

One of the more troubling aspects of the global warming debate and the rush to legislate reductions in CO2 has been the surprisingly stability of the earth's temperature over the last decade (as the Heartland Institute has consistently pointed out). If global warming is occurring at a pace necessary to reduce emissions by 80 percent by 2050, and carbon emissions are the culprit, we should see temperatures increase consistently.

Now, new evidence suggests that mayber our models are wrong. A new study from Rice University questions how important carbon dioxide really is to climate change. According to report on e!Science News web site:

"No one knows exactly how much Earth's climate will warm due to carbon emissions, but a new study this week suggests scientists' best predictions about global warming might be incorrect. The study, which appears in Nature Geoscience, found that climate models explain only about half of the heating that occurred during a well-documented period of rapid global warming in Earth's ancient past. The study, which was published online today, contains an analysis of published records from a period of rapid climatic warming about 55 million years ago known as the Palaeocene-Eocene thermal maximum, or PETM.

"In a nutshell, theoretical models cannot explain what we observe in the geological record," said oceanographer Gerald Dickens, a co-author of the study and professor of Earth science at Rice University. "There appears to be something fundamentally wrong with the way temperature and carbon are linked in climate models."

It's always struck me as more than a bit naive and arrogant to assume that our climate models have the accuracy to make the predictions advocates of radical carbon reductions claim. Theoretically, ten years of steady temperatures should buy us even more time to make the adjustments we need to.

Few people are asking a critical question: What is the downside of forcing life altering changes to lifestyles, technology, culture, and the loss of freedom implicity in proposed climate change policies if we are wrong about carbon's role in climate change, or climate change more generally?

Why Poor Countries Won't Curb Emissions

shikha.dalmia@reason.org (Shikha Dalmia) — Wed, 15 Jul 2009 00:00:00 EDT

Forbes

If I were an environmental activist, I would be despairing right around now about ever getting meaningful action on global warming. Over the last eight years, eco-warriors had managed to convince themselves that the main obstacle to their grand designs to recalibrate the Earth's thermostat was a stupid and callow U.S. president unwilling to lead the rest of the world.

But with Barack Obama in office they no longer have that problem. In fact, they have a charismatic and savvy spokesman who combines a deep commitment to their cause with considerable powers of persuasion. Yet his call to action at last week's G-8 summit in Italy yielded little more than polite applause, and that only when he issued a mea culpa. "I know that in the past, the United States has sometimes fallen short of meeting our responsibilities," he said amid cheers. "So let me be clear: Those days are over."

What did this brave self-flagellation yield? To be sure, he got the attendees to collectively declare that they would never ever let the Earth's temperature rise two degrees centigrade from pre-industrial levels. This is supposedly a prelude to the real horse-trading over emissions cuts that will begin in a Copenhagen, Denmark, meeting this December.

But the depressing thing for climate warriors was that Obama could not get developing countries, without whose cooperation there is simply no way to avert climate change, to accept—even just in theory—the idea of binding emissions cuts. India's prime minister took the occasion to position his country as a major victim of a problem not of its making. "What we are witnessing today is the consequence [of] over two centuries of industrial activity and high-consumption lifestyles in the developed world," he lectured. "They have to bear this historical responsibility." And even before the summit began, China declared the West had "no right" to ask it to limit its economic growth.

Rather than engage with the issues, eco-pundits are grasping for all kinds of fanciful pseudo-scientific theories to explain why Obama's sweet-talking ways are leaving the rest of the world cold. New York Times columnist Nicholas Kristof, for instance, recently blamed the lack of progress on the faulty circuitry evolution has wired into the human brain. According to Kristof, evolution has programmed us to be alert to immediate threats, such as snakes, or enemies with clubs, but not for vastly greater but less imminent dangers that require forethought. If this sounds like a warmed-over, 21st-century version of the Calvinistic crooked-timber view of human nature, that's because it is.

Not to be outdone, Kristof's Nobel Prize-winning colleague at the Times, Paul Krugman, pulled out the folk story about the frog and the boiling pot in his latest column to explain our collective torpor over climate change. Just as the proverbial frog wasn't able to feel the gradually rising temperature before he boiled to death, so too, in Krugman's telling, human beings are not equipped to comprehend the dangers of an overheating planet before they fry to death.

But this psychologizing only exposes the inability of climate activists to take seriously the rational case for inaction. In fact, there is a perfectly good reason developing countries are unwilling to act on climate change: What they are being asked to do is more awful than climate change's implications--even if one accepts all the alarmist predictions.

Consider what would be necessary to slash global greenhouse-gas emissions just 50% below 2000 levels by 2050—a far less aggressive goal than what the enviros say is necessary to avert climate catastrophe. According to U.S. Chamber of Commerce calculations, even if the West reduced its emissions by 80% below 2000 levels, developing countries would still have to return their emissions to 2000 levels to meet the 50% target. However, Indians currently consume roughly 15 times less energy per capita than Americans—and Chinese consume seven times less. Asking them, along with the rest of the developing world, to go back to 2000 emission levels with a 2050 population would mean putting them on a very drastic energy diet.

The human toll of this is unfathomable: It would require these countries to abandon plans to ever conquer poverty, of course. But beyond that it would require a major scaling back of living standards under which their middle classes—for whom three square meals, cars and air-conditioning are only now beginning to come within reach—would have to go back to subsistence living, and the hundreds of millions who are at subsistence would have to accept starvation.

In short, the choice for developing countries is between mass death due to the consequences of an overheated planet sometime in the distant future, and mass suicide due to imposed instant starvation right now. Is it any surprise that they are reluctant to jump on the global-warming bandwagon?

The Waxman-Markey climate change bill that just passed the U.S. House of Representatives wants to force developing countries to accept this fate by resorting to the old and tired method of protectionism. Should this monstrosity become law, starting in 2020 the United States will impose carbon tariffs on goods from any country that does not accept binding reductions. But this is a path to mutually assured economic destruction—not to combating climate change.

For starters, by 2020, when these tariffs go into effect, India and China—with GDPs projected to grow anywhere from 6% to 10% annually—will have much bigger economies with huge domestic markets that they are increasingly opening to each other. Thus they might well be better off forgoing access to the U.S. market than accepting crippling restrictions on their growth.

Also, by then they will have more economic clout on the world stage to enforce their own ideas of who ought to take moral responsibility for climate change. The West's case for restricting Indian and Chinese exports rests on the claim that these countries' total emissions will exceed those from the West within the next few decades. (China's emissions are already at par with those of the U.S., the biggest emitter).

But these countries have, and will continue to have, far lower emissions on a per-capita basis, given that China's are now around one-fifth those of the United States and India's one-twentieth. Thus they would have an equally valid case for imposing countervailing restrictions on American exports based on per-capita emissions. The West might well be the bigger loser in this economic warfare if it is barred from accessing new, growing markets.

Obama obviously understands this—which is why he has condemned the House's turn down the protectionist path. So what should climate warriors do? Right now the only certain way to save lives is by calling off this misguided war on climate change. If and when climate change promises to claim more casualties than poverty and starvation, the world will begin heeding their calls. If, however, these climate-change casualties don't materialize, there would have been no need to act in the first place. Either way, the world has far more immediate and scarier problems than climate change to address right now.

Shikha Dalmia is a senior analyst at Reason Foundation and a columnist for Forbes, where this article originally appeared.

Let's Do Something—Anything

info@reason.org (David Harsanyi) — Wed, 01 Jul 2009 14:54:00 EDT

Facts. Costs. Consequences.

Who cares?

We're in the middle of pretending to save the planet, baby.

If it's about helping "the environment," suspend reason and salvation is yours. As I'm sure you've heard a lot of smart and compassionate folks tell you lately, doing something—anything!—is better than doing nothing.

So the House did something. It passed a "cap and trade" bill that would ration energy, destroy productive jobs, levy the largest tax increase in United States history and, for kicks, penalize foreign trade partners who fail to engage in comparable economic suicide.

Now, assuming there are no speed-reading clairvoyants in the House, no one who voted for the 1,200-page bill—plus the 300-page amendment dropped the morning of the vote—possibly could have read it.

And any scum-sucking scoundrel who points out that "doing nothing" already includes spending billions on renewable energies and living under thousands of regulations is, as New York Times columnist Paul Krugman shrewdly noted, a traitor to humankind.

Speaking of doing nothing: Though it has the potential to stagnate the economy, the American Clean Energy and Security Act, according to the Environmental Protection Agency itself, would not create any reductions in emissions by 2020. The piddling impact of the bill is documented across the ideological spectrum.

So after the House passed the bill, I, curious about the particulars, sent a query to Rep. Betsy Markey (D-Colo.), because hers was one of the votes that put the bill over the top. Markey had been on the fence regarding cap and trade, so surely, she gave the bill a thorough once-over before voting. Not surprisingly, I received no reply.

When I later caught Markey swinging at softballs on television, I realized that she probably had been too busy boning up on her talking points to take the time to slog through 1,500 pages of a radical and generational shift in energy policy.

As terrible as this bill is—and America's only hope is that a more reasonable Senate will kill it—Markey and others have mastered the art of passing environmental legislation. Throw in "green jobs" or a "new energy economy" and you are golden. What kind of insensitive monster is going to stand in the way of a windmill?

If you're really in a fighting mood, drop a line about "energy independence"—and don't we love to hear that one? But do not under any circumstances, as Markey did, stray from your script to offer this remarkably ill-informed myth: "We are now beholden," Markey claimed, "to unstable governments in the Middle East for the majority of our oil."

That's scary stuff. And it brings up an important point: Cap and trade schemes do nothing to foster energy independence, though they hold the distinct possibility of making us more "dependent" on foreign oil imports.

Having to pay for expensive carbon credits will be an incentive for many American companies to close their carbon-emitting businesses and move abroad to places less devoted to destroying themselves.

The House's cap and trade also means that any energy that does not rely on windmills or solar panels—so, nearly all energy—could become cheaper to import rather than refine here.

It is also distressing, but not surprising, to hear a politician assert that trading with foreign nations means we are beholden to them rather than explain how trade makes partners more peaceful, makes us competitive, and makes everyone more prosperous.

But even if you measure trade as Markey does, we do not import the "majority" of our oil from "unstable" "Middle Eastern" countries.

According to the Energy Information Administration, the top sources for U.S. crude oil for many years have been Canada and Mexico—with Saudi Arabia third.

Saudi Arabia is a terrible place ruled by religious fascists (whom no American president ever should hold hands with or bow to), but it is rather stable, considering.

Not that it makes any difference, mind you. Something, after all, needs to be done.

David Harsanyi is a columnist at The Denver Post and the author of Nanny State. Visit his Web site at www.DavidHarsanyi.com. This column first appeared at Reason.com.

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The Cost of Doing Something

matt.welch@reason.com (Matt Welch) — Wed, 01 Jul 2009 12:10:00 EDT

On the eve of what would be a 219-212 House of Representatives vote in favor of the American Clean Energy and Security Act, the New York Times editorial board argued that whatever the bill's eventual price tag, it sure beat "the costs of doing nothing." Warned the Gray Lady: "By any measure—drought, famine, coastal devastation—the costs of inaction, of clinging to a broken energy policy, will dwarf the costs of acting now."

If that argument sounds familiar, it is. Times columnist Paul Krugman, while declaring those 212 nay votes guilty of "treason against the planet," posited that "we're facing a clear and present danger to our way of life, perhaps even to civilization itself." Therefore, "How can anyone justify failing to act?"

The same logic, minus some of the apocalyptic language, is being used this summer to push through President Barack Obama's other massively expensive overhaul to the way America does business: health care reform. "I can assure you," the president said recently in Green Bay, Wisconsin, "the cost of doing nothing is going to be a lot higher in the years to come. Our deficits will be higher. Our premiums will keep going up. Our wages will be lower. Our jobs will be fewer. Our businesses will suffer." Echoed Health and Human Services Secretary Kathleen Sebelius a week later: "The cost of doing nothing will render us a second rate nation on into the future." Rep. George Miller (D-Calif.), in subsequent House hearings, went still further: "There is not one child, not one worker, not one employer, nor one taxpayer who can further bear the cost of doing nothing."

Hyperbole aside, the urge to have the government do something in the face of a perceived crisis is arguably the most powerful and effective legislative engine known to man. If the crisis is acute enough, backers of state intervention will even admit that content matters less than the mere existence of action itself. During the height of last fall's financial panic, for example, New York Mayor and financial journalism titan Michael Bloomberg said on NBC's "Meet the Press" that "Nobody knows exactly what they should do, but anything is better than nothing." As the House of Representatives was passing the stimulus package this February, Rep. David Obey (D-Wisc.), chairman of the House Appropriations Committee, thundered that "the cost of doing nothing would be catastrophic." Auto bailout? "The cost of doing nothing is cataclysmic," warned Sen. Bob Casey (D-Penn.) last December.

In weighing the pros and cons of a given bill, one way to assess the "do something" argument is to apply analytical rigor where legislators and their enablers insert dystopian adjectives. For instance, instead of taking international trade economist Paul Krugman's word that global warming poses a "clear and present danger" to "civilization itself," you could grapple with the legislative analysis by Reason Science Correspondent (and controversial global warming believer) Ronald Bailey, who has followed the science and policy of this stuff for two decades.

Another way is to look back in history, and see how previous laws passed using this justification have stood the test of time. Here is a highly partial list of four questionable bills rammed through Congress using classic do-something logic. One could easily assemble a much longer tally of perceived crises that weren't actual emergenices, and/or instances when doing something turned out to be worse than doing nothing at all.

Law: Authorization for Use of Military Force Against Iraq Resolution of 2002
Existential Threat: President George W. Bush: "[T]he Iraqi regime is a threat of unique urgency....[I]t has developed weapons of mass death; it has used them against innocent men, women and children. We know the designs of the Iraqi regime. In defiance of pledges to the U.N., it has stockpiled biological and chemical weapons. It is rebuilding the facilities used to make those weapons....Saddam must disarm, period. If, however, he chooses to do otherwise, if he persists in his defiance, the use of force may become unavoidable." House Speaker Dennis Hastert: "I think the bottom line for all of us here is, we've been through this process, we've been through September 11th. We visited Ground Zero. We've been at the Pentagon the day after. And we don't want that type of tragedy to happen in this country again. And we will do everything in our power to prevent it from happening again."
Promise: "[A]s we saw in the fall of the Taliban, men and women celebrate freedom's arrival....We'll work with other nations to help the Iraqi people form a just government and a unified country. And should force be required, the United States will help rebuild a liberated Iraq."
Results: Saddam was indeed disarmed and dethroned, though he didn't have the weapons he was supposed to disarm. Neither freedom nor unity nor a "just government" arrived quite as advertised, and the rebuilding process continues.
Cost of Doing Something: An estimated 4,322 U.S. military killed and 68,920 wounded; 1,360 U.S. contractors killed, 318 non-U.S. coalition forces killed. An estimated 100,000 or so Iraqis killed, though those numbers are hard to measure and disputed. An estimated 2.8 million Iraqis displaced from their homes. Plus more than $1 trillion spent, and the U.S. military stretched.

Law: The Sarbanes-Oxley Act of 2002.
Existential Threat: Allegedly plummeting investor confidence in the wake of recent corporate scandals at Enron, Adelphia, WorldCom, and elsewhere.
Promise: President Bush: "No more easy money for corporate criminals, just hard time....The era of low standards and false profits is over."
Results: Um.
Cost of Doing Something: Created make-work for auditors. Compliance costs affected small actors disproportionately. Companies stopped going public.

Law: The Bipartisan Campaign Finance Reform Act of 2002.
Existential Threat: John McCain: "Our political system is confronting today a very serious challenge, as dangerous in its way as war and depression have been in the past. America will need your best efforts to defeat it. The threat that concerns me is the pervasive public cynicism that is debilitating our democracy....When the people come to believe that government is so dysfunctional or corrupt that it no longer serves these ends, basic civil consensus will deteriorate to the point that our culture might fragment beyond recognition....We desperately need to reform a campaign system that lures good people into bad practices; a system that values money far above ideas and integrity; a system that is a stain upon every public official's honor."
Promise: To "break the iron triangle of big money, lobbyists and legislation and take the government out of the hands of the special interests."
Results: Er, not so much.
Cost of Doing Something: Among many other restrictions on political speech, the law put the federal government in the role of censoring political advertisements by organizations unaffiliated with any political party or candidate. Compliance costs affected small actors disproportionately.

Law: The Anti-Terrorism and Effective Death Penalty Act of 1996
Existential Threat: Terrorism by foreigners (such as the 1993 bombing of the World Trade Center) and terrorism by domestics (such as Timothy McVeigh in 1995).
Promise: "[T]o stop terrorists before they strike, and to bring them to justice if they do....[T]o deport terrorists from American soil without being compelled by the terrorists to divulge classified information, and to bar terrorists from entering the United States in the first place."
Results: Terrorists, including foreigners, continued to murder on American soil.
Cost of Doing Something: Introduced the foul modern concept of secret courts that use secret evidence, removed the appeal process for when legal non-citizens tangle with power-crazed border guards, limited appeals for death row inmates.

There are times when doing something with the federal government is the perfectly appropriate or reasonable response to a given challenge. Such is the fodder of constructive public policy discussion. But when a politician or pundit uses scare language about the perils of inaction, that is often an attempt to shut discussion down, and force through something today that many of us will be sorry about for years to come.

Matt Welch is editor in chief of Reason. This column first appeared at Reason.com.

On the Very Idea of the Agricultural Committee

carson.young@reason.org (Carson Young) — Wed, 01 Jul 2009 09:00:00 EDT

The Waxman-Markey cap and trade bill has turned into a feeding frenzy for special interests, as Reason’s Ron Bailey warned back in April. Prominently elbowing its way to the public trough, as usual, is Big Agriculture:

Because they are the source of most carbon emissions, factories, power plants and oil refineries would all be covered by the caps and be required to buy the permits, or allowances, as they are called. The one major source that is not covered is the American farm…. But, for farmers, it wasn't enough to get a free pass on carbon emissions…. In the mind of the entitled American farmer, any increase in costs or reduction in revenue—whether from natural causes, market forces or government regulation—must be compensated for by the government.

This doesn’t come as a surprise, given the other boondoggles caused by the farm lobby’s disproportionate political influence (ethanol and the farm bill, to name a few). One institutional reason for the farm lobby’s clout is Congress’s committee structure. As Matt Yglesias explains,

One basic problem of democratic governance relates to concentrated interests versus diffuse ones. Organizing broad groups of people to advance the public interest in the face of entrenched opposition is difficult. And the committee structure is like it was designed to make this problem as bad as possible.

Ezra Klein proposes an obvious solution: get rid of agricultural committees. Agriculture is the only industry that gets legislative committees all to itself (not to mention an entire executive department). Maybe this made sense back in the 19th century, when the United States was still mostly an agrarian economy. But now that the agricultural sector employs only two percent of workers in the United States, agricultural committees have been reduced to serving as conduits between public funds and special interests, making already dreadful bills like Waxman-Markey even worse. Why do we need this problem?

Reason's Anthony Randazzo has more on the travesty that is Waxman-Markey here.

Will the Climate Change Bill Cost Just a Postage Stamp?

shikha.dalmia@reason.org (Shikha Dalmia) — Mon, 29 Jun 2009 10:12:00 EDT

The advocates of the climate change monstrosity that just passed the House - and is now headed to the Senate -- allege that the bill won't break the bank of Americans. To back their claims they point to a Congressional Budget Office study that estimated that in 2020 the bill's cost works out to about $175 a year for an average household. This translates into an extra postage stamp every day, the bill's author, Edward Markey (D-Mass), has been crowing. (My colleague, Anthony Randazoo, blogged the state-by-state breakdown of this estimate here.)

The CBO is a non-partisan entity that is held in high regard so its analysis has to be taken seriously. But Markey's sound-bite - that is being repeated ad nauseam by global warming alarmists - ignores this VERY important caveat: The $175 figure is based on the year 2020 - a year that the CBO itself acknowledges is not representative of the true costs of the program. Why? Because that year the government will still be handing a bulk of the carbon credits for free to power plants, utilities and other big emitters. Energy consumers won't feel the true pinch till about 2035 when these free allowances are phased out and the program starts forcing utilities etc. to buy about 70% of their credits. That's 16 years from now when President Obama (and Congressional backers of the bill) will be safely out of office, making millions of dollars giving speeches, and, in his spare time, basking in the sun room of his taxpayer-subsidized solar powered home.

Be that as it may, here is what CBO really says on page 3 of its report:

"This analysis focuses on the effect of the legislation in the year 2020, a point at which the cap would have been in effect for eight years (giving the economy time to adjust) and at which point the allocation of allowances would be representative of the situation prior to the phase-down of free allowances. The incidence of gains and losses would be considerably different once the free allocation of allowances has mostly ended. (Emphasis added)."

The true impact of the bill is a subject of fierce debate with: the Heritage Foundation estimating that it will cost a household about $4,300 annually; an MIT study putting this number at $3,100; and a previous CBO study of a similar bill at $1,600.

My own hunch?

The actual costs are likely unknowable because it is impossible to quantify opportunity costs of what could have! should have! would have! been had the resources being expended to appease the climate avatars been deployed in more productive segments of the economy.

The only thing certain is that they will be much higher than what meets the naked eye.

U.C. Berkeley: Trains are Not So Environmentally Friendly

adrian.moore@reason.org (Adrian Moore) — Mon, 29 Jun 2009 04:52:00 EDT

A study from U.C. Berkeley researchers looks at the whole panoply of environmental impacts of various modes of transport, including raw materials extraction, manufacturing, construction, operation, maintenance, fuels and much more.

We present results of a comprehensive life-cycle energy, greenhouse gas emissions, and selected criteria air pollutant emissions inventory for automobiles, buses, trains, and airplanes in the US, including vehicles, infrastructure, fuel production, and supply chains. We find that total life-cycle energy inputs and greenhouse gas emissions contribute an additional 63% for onroad, 155% for rail, and 31% for air systems over vehicle tailpipe operation. Inventorying criteria air pollutants shows that vehicle non-operational components often dominate total emissions. Life-cycle criteria air pollutant emissions are between 1.1 and 800 times larger than vehicle operation. Ranges in passenger occupancy can easily change the relative performance of modes.

In other words, how many people a vehicle carries matters crucially to the environmental outcome. Most urban rail transit systems don't carry enough people to be greener than cars. Diesel buses running empty are horrible, but when full they are pretty darn green.

Hat tip to Knowledge Problem, which pointed me to a nice summary at Next100.

The Real Climate Change Deniers

shikha.dalmia@reason.org (Shikha Dalmia) — Thu, 25 Jun 2009 23:39:00 EDT

The U.S. House is a cat's whisker away from passing a cap-and-trade climate change bill tomorrow that will effectively impose a $1,600 carbon tax on an average household in the name of fighting global warming. (For context, consider this: A typical family of four earning $50,000 a year pays $3,000 in income taxes).

But the irony is that the bill comes precisely when the rest of the world is experiencing fresh doubts about the science of manmade global warming. Wall Street Journal editorial writer Kimberly Strassel reports that New Zealand's new government last year immediately suspended the country's weeks-old cap-and-trade program. In France, President Nicolas Sarkozy wants to tap Claude Allegre to lead the country's new ministry of industry and innovation. Twenty years ago Mr. Allegre was among the first to trill about man-made global warming, but the geochemist has since recanted.

"The number of skeptics, far from shrinking, is swelling. Oklahoma Sen. Jim Inhofe now counts more than 700 scientists who disagree with the U.N. -- 13 times the number who authored the U.N.'s 2007 climate summary for policymakers. Joanne Simpson, the world's first woman to receive a Ph.D. in meteorology, expressed relief upon her retirement last year that she was finally free to speak 'frankly' of her nonbelief. Dr. Kiminori Itoh, a Japanese environmental physical chemist who contributed to a U.N. climate report, dubs man-made warming 'the worst scientific scandal in history.' Norway's Ivar Giaever, Nobel Prize winner for physics, decries it as the 'new religion.' A group of 54 noted physicists, led by Princeton's Will Happer, is demanding the American Physical Society revise its position that the science is settled. (Both Nature and Science magazines have refused to run the physicists' open letter.)," writes Strassel.

Why this turn around? Because for the last 10 years, the earth's temperatures have remained essentially flat. And over the next 10, some credible studies have actually predicted a cooling.

One does not have to believe that global warming is a total hoax to concede that its claims need further investigation before action. Denying dissenters a voice never serves the cause of science. Ask Galilelio.

Congress Is Hiding Cap-and-Trade Energy Price Increases

rbailey@reason.com (Ronald Bailey) — Wed, 10 Jun 2009 22:18:00 EDT

Last month, leading Congressional climateer, Rep. Henry Waxman (D-Calif.), chair of the House Energy and Commerce Committee, pushed out a sweeping 1000-page bill that aims to dramatically reshape how Americans will use energy in the 21st century. At the heart of the American Clean Energy and Security (ACES) Act is a cap-and-trade proposal for limiting the emissions of carbon dioxide by American industry and consumers. Carbon dioxide, produced by burning fossil fuels and chopping down forests, is building up in the atmosphere where it is thought be the chief cause of man-made global warming.

The ACES Act would establish an artificial carbon market by setting a limit on the amount of greenhouse gases that can be emitted each year. Beginning in 2012, a national cap—or total maximum CO2 emissions—would be set and then ratcheted downward annually. Under ACES, the U.S. would emit 17 percent less carbon dioxide in 2020 than it did in 2005, eventually falling to 83 percent less than emitted in 2005 by 2050.

Electric and gas utilities, cement plants, steel foundries, and other companies would be required to have one emissions permit for every ton of CO2 discharged from their smoke stacks. Under a cap-and-trade scheme, emissions permits can be allocated and/or auctioned up to the set cap. Once allocated, the market allows companies emitting less than their quota to sell their excess permits to emitters needing to buy extra to meet their cap. This process sets a price on each ton of carbon dioxide.

The central fact of the cap-and-trade proposal is that it will increase the price of energy. If energy prices don't go up, the goal of getting energy producers, manufacturers, and consumers to shift away from carbon generating fuels (coal, oil, and natural gas) toward low-carbon sources of energy (nuclear, solar, wind, conservation) will not be achieved.

Whatever else they are, the folks in Congress are not stupid when comes to protecting their electoral viability. They are painfully aware of the fact that, while Americans express support for regulations to reduce greenhouse gases, 77 percent in a recent ABC News/Washington Post poll declared themselves either "very concerned" or "concerned" that "federal regulation of greenhouse gases could substantially raise the price of things you have to pay for."

So in an attempt to ward off voter displeasure over higher energy prices brought about by Congressionally-mandated carbon rationing, the denizens on Capitol Hill have tacked on a number of Rube Goldbergesque policy obfuscations designed the mask the price increases. These include subsidies and tax breaks for retrofitting buildings to use less energy, setting energy conservation appliance standards, subsidies for higher mileage automobiles, and imposing a renewable fuel standard on utility companies, among many other things.

The chief technique that Congress is using to hide the mandated price increase in electricity and natural gas from voters is giving away free emissions permits to local electricity and gas distribution companies. In the ACES bill, some 30 percent of emissions permits are allocated free to local distribution companies who are supposed to sell the permits and then pass along the money to consumers as a lump sum rebate to offset their higher utility bills. Why a lump sum?

As Harvard University environmental economist Robert Stavins explains in his article on "The Wonderful Politics of Cap-and-Trade," the hope is that such rebates will compensate "consumers for increases in electricity prices, but without reducing incentives for energy conservation." Even if they are getting a rebate, higher monthly electric bills will still likely annoy voters. But let's assume that this scheme actually works as intended and blunts household displeasure about paying more for electricity and natural gas.

There's one big problem: The proposal merely shifts the price paid by consumers for energy from local utilities to other products and services. For example, Resources for the Future economists Rich Sweeney and Dallas Burtraw calculate that auctioning all of the carbon emissions permits would result in a price of $20.91 per metric ton. However, allocating 30 percent of the carbon dioxide emissions permits free to local utilities as proposed under the ACES bill would mean lower electricity prices, and lower prices would mean more consumption. The result is that there would 24 percent fewer emissions reductions in the electricity sector than would have been the case had all permits been auctioned.

The higher emissions in the electricity sector make it harder for other sectors of the economy—automobiles, construction, steel, cement, food processing, retail, agriculture—to stay below the national cap on carbon dioxide emissions. And this pushes up the demand for the remaining permits, which boosts their prices. Sweeney and Burtraw calculate that the requirement for increased emissions reductions in other sectors under a national cap would raise the allowance price to $26.90 per metric ton. The result, according to Sweeney and Burtraw, is that "this raises the costs of goods and services from these sectors."

So this plan to allocate "free" permits could well end up costing consumers even more than they "save" on their household electricity and natural gas bills. Fearing the electoral consequences of honesty, Congress is trying to hide the fact that they are increasing energy prices by distracting the American people with a torrent of rebates, subsidies, and tax incentives, along with plenty of happy talk about renewable energy and creating "green jobs." The result is that Congress has devised a complicated and inefficient scheme where distributing a "free" commodity actually makes products and services more expensive than it would otherwise have to be. That's truly "wonderful politics"!

Ronald Bailey is Reason magazine's science correspondent. This column first appeared at Reason.com.

Reducing Greenhouse Gas Emissions Without Reducing Mobility

bob.poole@reason.org (Robert Poole) — Tue, 09 Jun 2009 16:36:00 EDT

Public Works Financing

This year’s six-year reauthorization of the federal surface transportation program is likely to have far greater impact on our transportation future than anything since the launch of the Interstate highway program in 1956. Many organizations are calling for fundamental changes in the federal role, and while there is certainly much that is dysfunctional about the current federal program, some of the proposed changes could make things worse, not better.

An example is the proposal released on May 15 by Sens. Jay Rockefeller (D-WV) and Frank Lautenberg (D-NJ) of the Senate Commerce Committee. The first item on their list of “Major Goals of the Federal Surface Transportation Policy and Planning Act of 2009” was this: “Reduce national per capita motor vehicle miles traveled [VMT] on an annual basis.” Many of their other goals were either laudable or innocuous, but this one is definitely harmful, as I will explain.

Before getting into the details, however, just imagine a world in which any proposed new toll road (or toll lanes) project would have to demonstrate conformity with a state’s VMT reduction plan, in order to get a federal record of decision allowing it to be built. In other words, you’d have to prove that your new toll road would lead to less driving.

You may think that is highly unlikely to be legislated, but if you think that, you haven’t been paying attention to debates on transportation policy, energy policy, and global warming over the last few years. Reducing vehicle miles traveled is on the wish-list of just about every leading environmental organization. It is part of the agenda set forth in the 2008 Brookings paper, “A Bridge to Somewhere.” And it’s a top priority of a group called America 2050, with backing from the Rockefeller Foundation and several other nonprofits such as the Regional Plan Association and the Lincoln Institute of Land Policy.

Not only that, but VMT reduction is now the law in California, thanks to SB 375, enacted last year. In the name of greenhouse gas (GHG) reduction, this law sets GHG reduction targets for each of the state’s 17 metro areas and requires them to draft smart growth-oriented land use and transportation plans aimed at reducing VMT. Those that produce the “best” plans to do this will get priority in the allocation of about $20 billion per year in federal and state transportation funding.

The logic chain that underlies such efforts goes something like this. Transportation is a major source of GHGs, and the more people drive, the more GHGs they emit. If their jobs, schools, and shopping are close to where they live, they won’t drive as much. Therefore, government should promote compact, high-density development so as to reduce driving and therefore to reduce GHGs.

When working through this logic chain with data and numbers, it starts falling apart. First, all of transportation (including trucking, airlines, barges, etc.) contributes 27.9 percent of U.S. greenhouse gas emissions, according to the Environmental Protection Agency. Personal vehicles (cars and light trucks) are 61 percent of that; hence, personal vehicles are the source of 17 percent of GHGs, not one-third, as you will often hear.

Second, greenhouse gas emissions from vehicles are a function of speed. Stop-and-go driving (as in congestion) produces much greater GHG emissions than steady-speed driving between 30 and 60 miles per hour; above about 60 mph, GHGs increase fairly rapidly.

Third, there is no hard data showing that people who live in higher densities drive significantly less than those who live in typical suburbia.

Fourth, there is excellent data from the Australian Conservation Foundation showing that among housing types, townhouses have the lowest carbon footprint, single-family suburban houses the second-lowest, and high-rise condo-type dwellings the highest. This logic chain also ignores considerable evidence that traffic congestion increases with urban density—which of course increases GHG emissions.

If the attempts to reduce VMT in these ways succeed, the result will be even greater reductions in mobility than Americans already suffer through from today’s traffic congestion. There is a small but growing academic literature that finds direct correlations between reduced travel times and regional economic productivity. One key example: if you can go twice as far in a 30-minute commute, your potential-jobs area is four times as large (since the area of a circle around your house is proportional to the radius squared). Some of this research is summarized in the 2008 book Mobility First, by my Reason colleagues Sam Staley and Adrian Moore.

There’s already a lot of momentum for including reduced VMT as one key performance measure in the reauthorization bill, so it’s likely to take a serious effort to keep it out. Besides debunking the logic chain on which it’s based, let’s consider some positive talking points that can help make the case.

First, Americans should demand that proposed transportation-related greenhouse gas reduction measures meet a reasonable cost-effectiveness standard. Both the Intergovernmental Panel on Climate Change and the well-respected McKinsey & Company study, “Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?” recommend $50 per ton as a good benchmark, below which there are ample opportunities for large-scale but low-cost GHG reduction measures. (In the vehicular area, one of the most cost-effective is miles-per-gallon standards, like the tougher ones President Obama announced in May.) VMT reduction, especially via smart growth land use changes, will surely flunk that test.

Second, instead of setting goals for reduced VMT, we should aim to reduce VHT—vehicle hours of travel. High-occupancy toll (HOT) lanes and new urban toll roads using congestion pricing are excellent at reducing vehicle hours of travel, since reliable time savings are their main rationale. And since congestion pricing can maintain free-flow, uncongested travel, these managed roadways also reduce GHG emissions.

Finally, if we need a slogan, perhaps it could be this: Reduce CO2, not mobility. If we can re-frame the debate in this manner, we might well prevent the enactment of very harmful federal restrictions on driving.

Robert Poole is director of transportation at Reason Foundation.

Killing G.M. Softly

shikha.dalmia@reason.org (Shikha Dalmia) — Wed, 03 Jun 2009 13:34:00 EDT

President Barack Obama, the New York Times reports, is "upbeat" about GM's future. "I am confident that the steps I'm announcing will mark the end of the old G.M., and the beginning of a new G.M.," he said. Great! Then what do we, the taxpayers, who have just been forced to fork over $50 billion to G.M. -- in what is it? loans? stock? -- have to worry about? The president is cool with it. And he, after all, has an Ivy League degree, a silver tongue, not to mention a glamorous wife with lovely arms who dotes on him. But even His Awesomeness can't command a drowning man to swim after tying lead weights around his ankles.

The president seems to think that there is nothing that G.M. has that a visit to bankruptcy court won't cure. Amputate its liabilities to bondholders, excise all its promises to unions (no, actually, scratch that one, that didn't quite happen) and, presto, it'll be ready, once again, to kick some foreign ass.

If only!

Chapter 11 is certainly a necessary - and a long overdue - condition for G.M.'s return. But it is not a sufficient condition. What G.M. also needs is a winning business model. For that, as Paul Ingrassia pointed out in the Wall Street Journal yesterday, it needs to rediscover its instinct to give car buyers what they want even before they know they want it. G.M. once captured the imagination of the car-buying public by offering it chrome, tail fins, muscle cars, and the catalytic converter. (O.K. -- so its revival won't be all good!). But recovering its mojo with consumers won't be so easy for G.M. now given that its new owners - government and labor - don't really care about them.

The Obama administration recently accelerated the timetable for the new CAFÉ standards. This means that G.M., along with other car makers, will have to increase its overall fuel efficiency from about 25 mpg right now to 35.5 mpg by 2016, four years earlier than previously mandated. The only way G.M. can do this is by shifting its vehicle mix toward smaller, more fuel efficient cars - consumer desire be damned. Why? Because if it had the technology to boost fuel economy of its SUVs, trucks etc., without jacking up costs and compromising safety, it would run - not walk - to bring it to the market. But then of course it wouldn't be in bankruptcy!

There had been some vain hope that giving unions' ownership in G.M. (and Chrysler) might be good for the company. Why? Because this would tie the UAW's long-term survival with G.M.'s bottom line and prompt it to use its considerable influence to counter business-busting government demands. It was a nice theory. But it obviously didn't pan out in the CAFÉ fight.

However, even though unions couldn't protect G.M. from Uncle Sam in CAFÉ, it can use Uncle Sam to have their way with G.M. when their own interests clash with the company's bottomline.

For starters, the concessions unions have made to G.M. in bankruptcy are - to put it mildly -- pathetic. They agreed to scrap the policy that allowed their members to go home - or demand overtime -- after half a day's work if they met their production quota for the day. But their salaries and benefits are still higher than Japanese behemoths like Toyota and Honda's.

In addition, thanks to union demands, Midwestern Democrats from states like Ohio and Michigan have already warned the administration to not let G.M. increase its global manufacturing footprint, even if it means a huge reduction in production costs. Indeed, Ohio Democratic Sen. Sherrod Brown, speaking for the UAW, recently told Tim Geithner: "If it was a firestorm in this country when we give (sic) billions to banks and they pay bonuses, you haven't seen anything yet for what's going to happen if we put billions in auto companies and they open plants in China."

Besides limiting imports, Michigan's congressional delegation has also, as a condition of receiving the bailout money, forced the company to agree to reopen two idled plants by 2011 in, presumably, union states where its production costs are likely to be the highest in the country.

What all this means is that G.M. will emerge from bankruptcy with cleaner balance sheets, but far less flexibility. This is not a formula for "viability" understood as profitability -- President Obama's chipper confidence that its comeback is nigh notwithstanding. Far from returning the $50 billion, G.M. is likely to become an unquenchable money-guzzler that taxpayers will have to feed for many, many, many years to come.

Better grab your wallets.